Affiliated Managers Group Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549___________________________________________________________________________FORM 10-K(Mark One) ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017ORo TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period from to Commission File Number 001-13459__________________________________________________________________________Affiliated Managers Group, Inc.(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction ofincorporation or organization) 04-3218510(IRS EmployerIdentification Number)777 South Flagler Drive, West Palm Beach, Florida, 33401(Address of principal executive offices)(800) 345-1100(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon Stock ($0.01 par value) New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act:None____________________________________________________________________________Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ýIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ý No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). Yes ý No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein,and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, oremerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer ý Accelerated filer o Non-accelerated filer o (Do not check if a smallerreporting company) Smaller reporting company o Emerginggrowth company oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with anynew or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ýAt June 30, 2017, the aggregate market value of the common stock held by non-affiliates of the registrant, based upon the closing price of $165.86 onthat date on the New York Stock Exchange, was $9,252,014,628. There were 54,496,210 shares of the registrant’s common stock outstanding on February 21,2018.DOCUMENTS INCORPORATED BY REFERENCEPortions of the definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held on orabout June 12, 2018 are incorporated by reference into Part III. Table of ContentsFORM 10-KTABLE OF CONTENTSPART I Item 1. Business 1Item 1A. Risk Factors 7Item 1B. Unresolved Staff Comments 15Item 2. Properties 15Item 3. Legal Proceedings 15Item 4. Mine Safety Disclosures 15PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 16Item 6. Selected Financial Data 18Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19Item 7A. Quantitative and Qualitative Disclosures About Market Risk 35Item 8. Financial Statements and Supplementary Data 35Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 73Item 9A. Controls and Procedures 73Item 9B. Other Information 73PART III Item 10. Directors, Executive Officers and Corporate Governance 74Item 11. Executive Compensation 74Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 74Item 13. Certain Relationships and Related Transactions and Director Independence 74Item 14. Principal Accountant Fees and Services 74PART IV Item 15. Exhibits, Financial Statement Schedules 75Item 16. Form 10-K Summary 75iTable of ContentsPART IForward-Looking StatementsCertain matters discussed in this Annual Report on Form 10-K, in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), inour press releases and in oral statements made with the approval of an executive officer may constitute“forward-looking statements” within the meaning ofthe Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements related to our expectations regarding theperformance of our business, our financial results, our liquidity and capital resources and other non-historical statements, and may be prefaced with wordssuch as “outlook,” “guidance,” “believes,” “expects,” “potential,” “preliminary,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,”“predicts,” “projects,” “intends,” “plans,” “estimates,” “pending investments,” “anticipates” or the negative version of these words or other comparablewords. Such statements are subject to certain risks and uncertainties, including, among others, the factors discussed under the caption “Item 1A. RiskFactors.”These factors (among others) could affect our financial performance and cause actual results to differ materially from historical earnings and thosepresently anticipated and projected. Forward-looking statements speak only as of the date they are made, and we will not undertake and we specificallydisclaim any obligation to release publicly the result of any revisions which may be made to any forward-looking statements to reflect events orcircumstances after the date of such statements or to reflect the occurrence of events, whether or not anticipated. In that respect, we caution readers not toplace undue reliance on any such forward-looking statements.Item 1.BusinessWe are a global asset management company with equity investments in leading boutique investment management firms, which we refer to as our“Affiliates.” Our innovative partnership approach allows each Affiliate’s management team to own significant equity in their firm and maintain operationalautonomy. Our strategy is to generate shareholder value through the growth of existing Affiliates, as well as through investments in new Affiliates andadditional investments in existing Affiliates. In addition, we provide centralized assistance to our Affiliates in strategic matters, marketing, distribution,product development and operations. As of December 31, 2017, our aggregate assets under management were $836.3 billion in more than 550 investmentproducts across a broad range of active return-oriented strategies.We hold meaningful equity interests in each of our Affiliates and each Affiliate’s management team retains a significant equity interest in their own firm.Affiliate management equity ownership (along with our long-term ownership) aligns our interests, enhances Affiliate management equity incentives andpreserves the opportunity for Affiliate management to participate directly in the long-term future growth of their firms. Our innovative partnership approachprovides Affiliate management with a degree of liquidity and financial diversification while ensuring that our Affiliates maintain operational autonomy inmanaging their business, thereby preserving their unique entrepreneurial culture and independence.Given our long-term partnership approach, we address the ongoing succession planning issues facing the Affiliate’s principal owners as they transitionincentives to future generations by facilitating the transfer of equity over time to the next generation of Affiliate management. In certain cases, we do nothave an obligation to repurchase Affiliate equity interests, but we may make additional investments to further facilitate Affiliate ownership transition.Although we invest in boutique investment management firms that we anticipate will grow independently, given our partnership approach, we enhanceour Affiliates’ growth prospects by providing access to the resources and scale of a global asset management company.We are focused on investing in investment management firms around the world managing active return-oriented strategies, including traditional,alternative and wealth management firms. We identify high-quality boutique firms based on our thorough understanding of the asset management industry,and we have developed long-term relationships with a significant number of these firms. Within our target universe, we seek strong and stable boutiques thatoffer active return-oriented strategies, such as alternative strategies and global equities strategies. These boutiques are typically characterized by a strongmulti-generational management team, entrepreneurial culture and commitment to building long-term success.We anticipate that we will continue to have significant investment opportunities across the global asset management industry, most often in independentinvestment management firms, and will continue to have investment opportunities resulting from subsidiary divestitures, secondary sales and other specialsituations. In addition, we also have the opportunity to make additional investments in our existing Affiliates. We are well-positioned to execute upon theseinvestment opportunities through our established process of identifying and cultivating investment prospects, our broad industry relationships and oursubstantial experience and expertise in structuring and negotiating transactions. We have a strong global reputation as an1Table of Contentsoutstanding partner to our Affiliates, and we are widely recognized in the marketplace as providing innovative solutions for the succession and strategicneeds of boutique investment management firms.Investment Management OperationsThrough our Affiliates, we provide a comprehensive and diverse range of active return-oriented strategies. As of December 31, 2017, we managed$836.3 billion in traditional and alternative strategies in more than 550 investment products across investment styles, asset classes and geographies. Ourtraditional strategies include global equities, emerging markets equities, U.S. equities and multi-asset and other strategies. Our alternative strategies includefixed income and equity relative value, systematic diversified, private equity and real assets and other alternative strategies. The following chart providesinformation regarding our traditional and alternative active return-oriented strategies as of December 31, 2017.Institutional, Retail and High Net Worth ClientsThrough our Affiliates, we provide a comprehensive and diverse range of active return-oriented strategies designed to assist institutional, retail and highnet worth clients worldwide in achieving their investment objectives. We manage disciplined and focused investment strategies that address the specializedneeds of institutional clients, including foundations and endowments, defined benefit and defined contribution plans for corporations and municipalities,and multi-employer plans. Through our retail distribution platform and the retail distribution efforts of our Affiliates, we provide boutique investmentmanagement expertise to retail investors through advisory and sub-advisory services to active return-oriented mutual funds, Undertakings for the CollectiveInvestment of Transferable Securities (“UCITS”) and other retail products. Our investment management services to retail investors are distributed globallythrough various intermediaries, including independent investment advisors, retirement plan sponsors, broker-dealers, major fund marketplaces, separatelymanaged accounts (“SMAs”), including unified managed accounts (“UMAs”), and bank trust departments. We also provide investment management andcustomized investment counseling and fiduciary services to high net worth individuals, families and charitable foundations, and to individually managedaccounts via intermediaries, including brokerage firms or other sponsors.Global DistributionOur Affiliates’ investment services and products are distributed by sales and marketing professionals that develop new business through direct salesefforts and established relationships with consultants and intermediaries around the world. Our global distribution platform operates in key markets to extendthe reach of our Affiliates’ own business development efforts and provide the necessary resources and expertise to ensure that our Affiliates’ products andservices are responsive to the evolving demands of the global marketplace. We have offices in Sydney, serving investors in Australia and New Zealand;London, serving investors in the UK and continental Europe; Zurich, serving investors in Switzerland; Dubai, serving investors in the Middle East; and HongKong, serving investors in Asia.We also have retail distribution platforms in the U.S. and Ireland. AMG Funds, our U.S. retail distribution platform, provides access to the investmentservices of our Affiliates and independent fund managers. For non-U.S. investors, our Irish UCITS platform provides access to certain of our Affiliates’investment services through a family of UCITS funds.Our Innovative Structure and Relationship with Affiliates2Table of ContentsWe establish and maintain long-term partnerships with the management equity owners of our Affiliates, and believe that Affiliate management equityownership (along with our long-term ownership) aligns our and our Affiliates’ interests, enhances Affiliate management equity incentives and preserves theopportunity for Affiliate management to participate directly in the long-term future growth of their firms. Our innovative partnership approach allows eachAffiliate’s management team to retain sufficient equity in their firm to address their particular needs. Affiliate management equity ownership also providesAffiliate management with a degree of liquidity and financial diversification while ensuring, by providing investment and operational autonomy inmanaging their businesses, that our Affiliates maintain their unique entrepreneurial culture and independence. Although the equity structure of each Affiliateinvestment is tailored to meet the needs of management equity owners of the particular Affiliate, in all cases, we maintain a meaningful equity interest in theAffiliate, with a significant equity interest retained by Affiliate management.Each of our Affiliates operates through distinct entities, typically organized as limited liability companies or limited partnerships (or equivalent non-U.S.forms), which affords us the flexibility to design a separate operating agreement for each Affiliate that reflects our customized arrangements with respect togovernance, economic participation, equity incentives and the other terms of our relationship. In each case, the operating agreement provides for agovernance structure that gives Affiliate management the authority to manage and operate the business on a day-to-day basis. The operating agreement alsoreflects the specific terms of our economic participation in the Affiliate, which, in each case, uses a “structured partnership interest” to ensure alignment ofour economic interests with those of Affiliate management. When we own a controlling interest in an Affiliate, we typically use structured partnership interests in which we share in the Affiliate’s revenue withoutregard to expenses. For these Affiliate investments, a set percentage of revenue is allocated to fund operating expenses, including compensation (the“Operating Allocation”), while the remaining revenue (the “Owners’ Allocation”) is allocated to us and Affiliate management in proportion to our respectiveownership interests. We and Affiliate management, therefore, participate in any increase or decrease in revenue through the Owners’ Allocation, and Affiliatemanagement also participates in any increase or decrease in margin through the Operating Allocation. We consolidate these Affiliates’ financial results intoour Consolidated Financial Statements.Exhibit 1 (Typical Structured Partnership Interest)When we do not own a controlling interest in an Affiliate, but have significant influence, we account for our interest in the Affiliate under the equitymethod. For these Affiliates, we use structured partnership interests in which our share of the Affiliate’s earnings or losses is contractually calculated,allocated and distributed using a formula whereby our share is based on a percentage of the Affiliate’s revenue less certain agreed-upon expenses. This typeof partnership interest allows us to benefit from any increase in revenue or any decrease in the expenses that are included in the calculation, but also directlyexposes us to any decrease in revenue or any increase in such expenses. We also use structured partnership interests in which our share of the Affiliate’searnings or losses is contractually calculated, allocated and distributed using a formula whereby our share is based on a percentage of the Affiliate’s revenuewithout regard to expenses. In this type of partnership interest, our contractual share of revenue generally has priority over distributions to Affiliatemanagement. We do not consolidate Affiliates accounted for under the equity method into our Consolidated Financial Statements. Instead, our share ofearnings from these Affiliates, net of amortization and impairments, is included in Income from equity method investments in our Consolidated3Table of ContentsStatements of Income, and our interest in these Affiliates is reported in Equity method investments in Affiliates in our Consolidated Balance Sheets.Whether we consolidate an Affiliate’s financial results or use the equity method of accounting, we maintain the same partnership approach and providesupport and assistance in substantially the same manner for all Affiliates. From time to time, we may change the structure of our interest in an Affiliate inorder to better support the Affiliate’s growth strategy.CompetitionOur Affiliates compete with a large number of domestic and foreign investment management firms, as well as with subsidiaries of larger financialorganizations. These firms may have significantly greater financial, technological and marketing resources, captive distribution and assets undermanagement, and many of these firms offer an even broader array of products and services in particular investment strategies. Certain of our Affiliates offertheir investment management services to the same client types and, from time to time, may compete with each other for clients. In addition, there arerelatively few barriers to entry for new investment management firms, especially for those looking to provide investment management services toinstitutional and high net worth investors. We believe that the most important factors affecting our Affiliates’ ability to compete for clients are the:•investment performance track records, investment style, discipline and reputation of our Affiliates and their management teams;•depth and continuity of client relationships;•diversity of products and level of client service offered;•changes in investor preferences, such as the recent growth in passively-managed products;•maintenance of strong business relationships with major intermediaries;•continued development, either organically or through new investments, of investment strategies to meet the changing needs and risk tolerances ofinvestors; and•continued success of our global distribution platform.The relative importance of each of these factors can vary depending on client type, and the investment management service involved, as well as generalmarket conditions. An Affiliate’s ability to retain and increase assets under management could be adversely affected if client accounts underperform incomparison to relevant benchmarks or peer groups, or if key personnel leave an Affiliate. The ability to compete with other investment management firmsalso depends, in part, on the relative attractiveness of our or our Affiliate’s active return-oriented investment strategies, market trends, fees or a combinationof these factors.We compete with a number of acquirers of and investors in investment management firms, including other investment management companies, privateequity firms, sovereign wealth funds and larger financial organizations. We believe that the most important factors affecting our ability to compete for futureinvestments are the:•degree to which target firms view our investment model, purchase price, equity incentive structures and access to economies of scale as preferable(financially, operationally or otherwise) to acquisition or investment arrangements offered by others; and•reputation and performance of our Affiliates, by which target firms may judge us and our future prospects.Government RegulationOur and our Affiliates’ businesses are subject to complex and extensive regulation by various regulatory authorities and exchanges in jurisdictionsaround the world, including those summarized below. These regulations may change from time to time, including as a result of political developments in theU.S. and the other jurisdictions in which we and our Affiliates operate. Our or our Affiliates’ businesses may be subject to inquiries by regulatory authorities,and these regulatory authorities may also conduct examinations or inspections of our operations or those of our Affiliates with or without notice. Anydetermination of a failure to comply with laws, rules or regulations could result in disciplinary or enforcement action, fines, suspensions, or revocation orlimitation of business activities or registration. See “Item 1A. Risk Factors.”4Table of ContentsAMG Funds is an adviser registered with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and sponsorsapproximately 65 U.S. mutual funds registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), that in aggregateform the AMG Funds complex. AMG Funds serves as the investment manager and/or administrator for the AMG Funds complex, which includes Affiliatesand unrelated investment managers as sub-advisers. A number of our Affiliates also serve as advisers or sub-advisers to mutual funds sponsored by them or bythird parties. Mutual funds and their advisers are regulated by the SEC, and the SEC has adopted regulations under the Advisers Act and the InvestmentCompany Act that govern the operations of mutual funds. The Advisers Act imposes numerous obligations on registered investment advisers, includingfiduciary duties, recordkeeping requirements, operational requirements and compliance and disclosure obligations. The Investment Company Act imposesadditional obligations on fund advisers, including investment restrictions and other governance, compliance, reporting and fiduciary obligations relating tothe management of mutual funds.Outside of the U.S., Affiliated Managers Group Limited (“AMG Limited”) is regulated by the Financial Conduct Authority in the UK, and is authorizedas a promoter in Ireland by the Central Bank of Ireland. AMG Limited serves as the promoter for our Irish UCITS platform, which sponsors UCITS fundsmanaged by Affiliates and marketed by AMG Limited in Europe. AMG Limited’s subsidiary, AMG (Switzerland) AG, is regulated by the Swiss FinancialMarket Supervisory Authority (“FINMA”) as a distributor of collective investment schemes to qualified investors. AMG Limited’s branch, AMG Limited(Dubai), is regulated as a representative office by the Dubai Financial Services Authority. Affiliated Managers Group (Hong Kong) Limited is regulated bythe Securities and Futures Commission in Hong Kong, and Affiliated Managers Group Pty Ltd is regulated by the Australian Securities and InvestmentsCommission in Australia. Our ability to transact business in these countries, and to conduct cross border activities, is subject to the continuing availability ofregulatory authorization. Our Affiliates’ investment management operations are also subject to regulation by U.S. and non-U.S. authorities and exchanges, which impose a broadarray of requirements on the conduct of business. The majority of our Affiliates are registered as investment advisers under the Advisers Act, which obligatesthem to act as fiduciaries for their clients. Many of our Affiliates are also subject to non-U.S. regulatory oversight and the standards of conduct of the otherjurisdictions in which they do business. We have Affiliates domiciled in a number of jurisdictions, and these Affiliates are subject to regulation under thelaws, rules and regulations of and supervision by governmental authorities in each of these jurisdictions. Our Affiliates also offer their products and servicesin many countries around the world and are subject to various requirements relating to such activities. Many of our Affiliates sponsor registered andunregistered funds in the U.S. and in other jurisdictions, and are subject to regulatory requirements in those jurisdictions and in the jurisdictions where thosefunds may be offered. Our Affiliates invest in publicly-traded securities of issuers across the globe and are subject to requirements in numerous jurisdictionsfor reporting of beneficial ownership positions and other requirements. Virtually all aspects of the asset management business, including investmentstrategies and trading, product-related sales and distribution activities, are subject to regulation. These laws, rules and regulations are primarily intended toprotect the clients of asset managers and generally grant supervisory agencies and regulatory bodies broad administrative powers, including the power to setminimum capital requirements and to impose fines or limit or restrict an investment adviser from conducting its business in the event of a failure to complywith such laws, rules and regulations.We and our Affiliates are also subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and related regulations, withrespect to their retirement plan clients. ERISA imposes duties on persons who are fiduciaries under ERISA, and prohibits certain transactions involvingrelated parties to a retirement plan. The U.S. Department of Labor administers ERISA and regulates investment advisers who service retirement plan clients,and has been increasingly active in proposing and adopting additional regulations applicable to the asset management industry, including a new ruleextending the application of the fiduciary duty to brokers and other intermediaries in the context of retirement advice.We and certain of our Affiliates are also members of the National Futures Association (“NFA”) and are regulated by the U.S. Commodity Futures TradingCommission (“CFTC”) with respect to the management of mutual funds and other products that utilize futures, swaps or other derivative products. The NFA isa self-regulatory organization in the U.S. with broad authority to conduct examinations and investigations of its members, which can result in censure, fine,suspension or expulsion of an NFA member, its officers or registered employees.In addition, we and certain of our Affiliates are registered broker-dealers and members of the Financial Industry Regulatory Authority (“FINRA”), for thepurpose of distributing funds or other asset management products. These broker-dealers are subject to net capital rules that mandate that they maintain certainlevels of capital. FINRA has adopted extensive regulatory requirements relating to sales practices, registration of personnel, compliance and supervision, andcompensation and disclosure. FINRA and the SEC conduct periodic examinations of member broker-dealers. The SEC, FINRA and state securitiescommissions may also conduct administrative proceedings that can result in censure, fine, suspension or expulsion of5Table of Contentsa broker-dealer, its officers or registered employees. We and our Affiliates may also be subject to regulatory capital requirements, including those of federal,state and non-U.S. regulatory agencies.Due to the extensive laws and regulations to which we and our Affiliates are subject, we must devote substantial time, expense and effort to remainingcurrent on, and to address, legal and regulatory compliance matters. We have established compliance programs for each of our operating subsidiaries, andeach of our Affiliates has established a compliance program to address regulatory compliance requirements for its operations. We and our Affiliates haveexperienced legal and compliance professionals in place to address these requirements, and have relationships with various legal and regulatory advisors ineach of the countries where we and our Affiliates have business interests.Employees and Corporate OrganizationAs of December 31, 2017, we had approximately 4,400 employees, the substantial majority of which were employed full-time by our Affiliates. Neitherwe nor our Affiliates are subject to any collective bargaining agreements, and we believe that our and our Affiliates’ labor relations are good. We were formedin 1993 as a corporation under the laws of the State of Delaware.Our Web SiteOur web site is www.amg.com. Our web site provides information about us, and, from time to time, we may use it as a distribution channel of materialcompany information. We routinely post financial and other important information regarding the Company in the Investor Relations section of our web siteand we encourage investors to consult that section regularly. The Investor Relations section of our web site also includes copies of our Annual Reports onForm 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including exhibits, and any amendments to those reports filed or furnishedwith the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We make these reports availablethrough our web site as soon as reasonably practicable after our electronic filing of such materials with, or the furnishing of them to, the SEC. The informationcontained or incorporated on our web site is not a part of this Annual Report on Form 10-K.6Table of ContentsItem 1A.Risk FactorsWe and our Affiliates face a variety of risks that are substantial and inherent in our businesses, including those related to markets, liquidity, credit,operational, legal and regulatory risks. The following are some of the more important factors that could affect our and our Affiliates’ businesses. Certainstatements in “Risk Factors” are forward-looking statements. See “Forward-Looking Statements.”Our financial results depend on the receipt of asset and performance based fees by our Affiliates, and are impacted by changes in our total assets undermanagement as well as the relative levels of assets under management among our Affiliates.Our financial results depend on the receipt of asset and performance based fees by our Affiliates. Asset based fees are primarily based on a percentage ofthe value of assets under management, and vary with the nature of the account or product managed. In certain instances, our Affiliates are paid fees based oninvestment performance on an absolute basis or relative to a benchmark and, as such, are directly dependent upon investment results that may varysubstantially from year to year. The total level of our assets under management generally or with particular Affiliates could be adversely affected byconditions outside of our control, including:•a decline in market value of such assets, including due to exchange rate fluctuations, or declines in the capital markets and in the equity markets inparticular;•changes in investor risk tolerance or investment preferences, such as the recent growth in passively-managed products, which could result in investorallocations away from active return-oriented strategies offered by our Affiliates;•our Affiliates’ ability to maintain existing client relationships and fee structures; •our or our Affiliates’ ability to market products and services, which may be impacted by volatility in the capital markets or in the prices of securities;•our ability to market products and services available through AMG Funds;•unanticipated changes in currency exchange rates, interest rates, inflation rates or the yield curve;•global economic conditions, which may be exacerbated by changes in the equity or debt marketplaces;•financial crises, political or diplomatic developments, war, terrorism or natural disasters; and•other factors that are difficult to predict.A reduction in our assets under management would adversely affect the fees payable to our Affiliates and, ultimately, our results of operations andfinancial condition. Further, our structured partnership interests are tailored to meet the needs of each Affiliate and are, therefore, varied, and our revenue andprofitability may be adversely affected by changes in the relative performance and the relative levels of assets under management among our Affiliates,independent of overall effective fee rates and our total level of assets under management. Additionally, certain Affiliates contribute significantly to ourresults of operations and, therefore, changes in the assets under management at such Affiliates could have a disproportionate adverse impact on our results ofoperations. Our growth strategy depends upon the continued growth of our existing Affiliates and upon making investments in new boutique investment managementfirms or additional investments in existing Affiliates.Our Affiliates may not maintain their respective levels of performance or contribute to our growth at their historical or currently anticipated levels. Also,our Affiliates may be unable to carry out their management succession plans, which may adversely affect their operations and revenue streams and thus ourresults of operations.Our continued success in investing in boutique investment management firms will depend upon our ability to find suitable firms in which to invest ormake additional investments in existing Affiliates, our ability to negotiate agreements with such firms on acceptable terms and our ability to raise the capitalnecessary to finance such transactions. In addition, our investments involve a number of risks, including the existence of unknown liabilities that may ariseafter making an investment. We cannot be certain that we will be successful in making investments in such firms or that they will have favorable operatingresults following our investment, which could have an adverse effect on our financial condition and results of operations.7Table of ContentsHistorically, equity markets and our common stock have been volatile.The market price of our common stock has experienced and may continue to experience volatility, and the broader equity markets have experienced andmay again experience significant price and volume fluctuations. In addition, our announcements of our financial and operating results or other materialinformation, including changes in net client cash flows and assets under management, changes in our financial guidance or our failure to meet such guidance,changes in general conditions in the economy or the financial markets and other developments affecting us, our Affiliates or our competitors, as well asgeopolitical, regulatory, economic, and business factors unrelated to us, could cause the market price of our common stock to fluctuate substantially.If our or our Affiliates’ reputations are harmed, we could suffer losses in our business and financial results.Our business depends on earning and maintaining the trust and confidence of our Affiliates and our stockholders, and on our and our Affiliates’reputations among existing and potential clients. Our and our Affiliates’ reputations are critical to our business and could be impacted by events that may bedifficult or impossible to control, and costly or impossible to remediate. For example, alleged or actual failure by us, our Affiliates or our respectiveemployees to comply with applicable laws, rules or regulations, errors in our public reports, threatened or actual litigation against us, any of our Affiliates orour respective employees, cyber-attack or data breach incidents, or the public announcement and potential publicity surrounding any of these events, even ifsatisfactorily addressed or if no violation or wrongdoing actually occurred, could adversely impact our or our Affiliates’ reputations, our relationships withour Affiliates and our ability to negotiate agreements with new investment management firms, any of which could have an adverse effect on our financialcondition and results of operations.Our and our Affiliates’ businesses are highly regulated.Our and our Affiliates’ businesses are subject to complex and extensive regulation by various regulatory and self-regulatory authorities and exchanges injurisdictions around the world, which, for our Affiliates and AMG Funds, include those applicable to investment advisers, as detailed in “GovernmentRegulation” in Item 1. These laws, rules and regulations impose requirements, restrictions and limitations on our and our Affiliates’ businesses, andcompliance with these laws, rules and regulations can result in significant expense. Further, this regulatory environment may be altered without notice bynew laws or regulations, revisions to existing laws or regulations or new or revised interpretations, guidance or enforcement priorities. Any determination of afailure to comply with applicable laws, rules or regulations could expose us or our Affiliates to civil liability, criminal liability or disciplinary or enforcementaction, with penalties that could include the disgorgement of fees, fines, sanctions, suspensions, termination of adviser status or censure of individualemployees or revocation or limitation of business activities or registration, any of which could have an adverse impact on our stock price, financial conditionand results of operations. Further, if we or any of our Affiliates were to fail to comply with applicable laws, rules or regulations or be named as a subject of aninvestigation or other regulatory action, the public announcement and potential publicity surrounding any such investigation or action could have anadverse effect on our stock price and result in increased costs, even if we or our Affiliates were found not to have violated such laws, rules or regulations.Globally, recent regulatory proposals have called for more stringent oversight of the financial services industry in which we and our Affiliates operate.Such proposals, if adopted, could adversely affect our and our Affiliates’ businesses, increase compliance costs, require that we or our Affiliates curtailoperations or investment offerings or impact our and our Affiliates’ access to capital and the market for our common stock. For example, in the U.S., recentrulemaking by the SEC has created additional reporting requirements for advisers and funds, and additional requirements for mutual funds in the areas ofliquidity management. In addition, U.S. Department of Labor regulations that became effective in 2017 have extended the application of fiduciary dutystandards under ERISA to brokers and other intermediaries in the context of retirement advice, which impacts the way retirement products are sold and couldnegatively impact the distribution of Affiliate products. The SEC has announced its intention to propose fiduciary rulemaking that could alter currentrequirements for advisors or further impact the ability of brokers and other intermediaries to distribute our Affiliates’ products.Our and our Affiliates’ businesses may also be impacted by financial services reform initiatives enacted or under consideration by the European Union.For example, regulators continue to consider whether asset managers or funds, or certain asset management products or activities, should be designated as“systemically important,” and, therefore, subject to additional regulation. The European Union has also instituted the revised Markets in FinancialInstruments Directive (“MiFID II”), which requires the unbundling of research and execution charges for trading and which may result in increased costs forus and our Affiliates. We and certain of our Affiliates will also be impacted by the European Union’s new General Data Protection Regulation, effective May2018, which will expand data protection rules for individuals within the European Union and for personal data exported outside the European Union, andany determination of a failure to comply with such regulation could result in significant fines. Our and our Affiliates’ businesses may also be impacted by theterms of the UK’s exit from the European Union, which could impact our or our Affiliates’ ability to conduct operations pursuant to a European passport.8Table of ContentsThese new laws, rules and regulations could limit our and our Affiliates’ businesses, result in increased compliance costs and expenses and expose us and ourAffiliates to potential fines and penalties.Our and our Affiliates’ international operations are subject to foreign risks, including political, regulatory, economic and currency risks.We and certain of our Affiliates operate offices or advise clients outside the U.S., and a number of our Affiliates are based outside the U.S. Accordingly,we and certain of our Affiliates are subject to risks inherent in doing business internationally, in addition to the risks our businesses face more generally.These risks may include changes in applicable laws and regulatory requirements, difficulties in staffing and managing foreign operations, longer paymentcycles, difficulties in collecting investment advisory fees receivable, different (and in some cases less stringent) legal, regulatory and accounting regimes,political instability, fluctuations in currency exchange rates, expatriation controls, expropriation risks and potential adverse tax consequences. In the UK, forexample, our and our Affiliates’ businesses may be impacted by the terms of the UK’s exit from the European Union. In addition, we and certain of ourAffiliates are required to maintain minimum levels of capital, and such capital requirements may be increased from time to time, which may have the effect oflimiting withdrawals of capital, repayment of intercompany loans and payment of distributions to us by these Affiliates. These or other risks related to ourand our Affiliates’ non-U.S. operations may have an adverse effect on our business, financial condition and results of operations.Failure to comply with applicable laws, rules, regulations, codes, directives, notices or guidelines in any jurisdiction outside of the U.S. could result in awide range of penalties and disciplinary actions, including fines, censures and the suspension or expulsion from a particular jurisdiction or market or therevocation of licenses, any of which could adversely affect our or our Affiliates’ reputations and operations. Regulators in jurisdictions outside of the U.S.could also change their policies, regulations or laws in a manner that might restrict or otherwise impede the ability to offer our Affiliates’ investment productsand services in their respective markets, or we or our Affiliates may be unable to keep up with, or adapt to, the ever-changing, complex regulatoryrequirements in such jurisdictions or markets, which could further negatively impact our business.Changes in tax laws, including the recent changes in U.S. tax laws, or exposure to additional tax liabilities could have an adverse impact on our business,financial condition and results of operations.We are subject to income taxes as well as non-income-based taxes in the U.S. and certain foreign jurisdictions. Tax laws, regulations and administrativepractices in these jurisdictions may be subject to significant change, with or without notice, and significant judgment is required in estimating andevaluating our tax provision and accruals. Our effective tax rates could be affected by a change in the mix of earnings in countries with differing statutory taxrates, as well as changes in foreign currency exchange rates, changes to our existing business and changes in relevant tax, accounting or otherlaws, regulations, administrative practices and interpretations. In December of 2017, changes in U.S. tax laws were enacted, which significantly revised U.S.corporate income tax by, among other things, lowering corporate income tax rates, implementing a modified territorial tax system and imposing a one-timetransition tax on deemed repatriated foreign earnings and profits. See Note 22 of the Consolidated Financial Statements. Although we expect these changesto result in an ongoing net benefit to our results of operations, primarily due to lower U.S. tax rates, the legislation is unclear in some respects and the U.S.Treasury Department, as well as state tax authorities and the Financial Accounting Standards Board, have yet to implement regulations, rules and accountingstandards, as applicable, and could issue further interpretations and guidance, the timing and substance of which is uncertain. This legislation could also besubject to potential amendments and technical corrections, which could have retroactive effect. Further, a portion of our earnings are earned outside the U.S.,and the foreign government agencies in jurisdictions in which we do business continue to focus on the taxation of multinational companies, and couldimplement changes to their tax laws in response to the changes in U.S. tax laws or otherwise. Any changes to U.S. or foreign tax laws, regulations, accountingstandards or administrative practices, or the release of additional guidance, interpretations or other information relating to the recent U.S. tax legislation orotherwise, could impact our estimated effective tax rate and overall tax expense, as well as our earnings estimates, and could result in adjustments to ourtreatment of deferred taxes, including the realization or value thereof, or in unanticipated additional tax liabilities, any of which could have an adverse effecton our business, financial condition and results of operations.In addition, we are subject to ongoing tax examinations by certain tax authorities in the U.S., and may be subject to future tax examinations by taxauthorities in the U.S. and in certain foreign jurisdictions. We regularly assess the likely outcomes of these examinations in order to determine theappropriateness of our tax provision; however, tax authorities may disagree with certain positions we have taken and may assess additional taxes and/orpenalties and interest. The uncertainties relating to the recent changes in U.S. tax laws may increase the potential for this to occur, and we could havedisagreements with the U.S. Internal Revenue Service on tax returns based on certain filing positions. There can be no assurance that we will accuratelypredict the outcomes of these examinations and the actual outcomes could have an adverse impact on our financial condition and results of operations.9Table of ContentsOur Affiliates’ autonomy limits our ability to alter their management practices and policies, and we may be held responsible for liabilities incurred bycertain of our Affiliates.Although our agreements with Affiliates typically give us the authority to control and/or vote with respect to certain of their business activities, wegenerally are not directly involved in managing our Affiliates’ day-to-day activities, including investment management operations, fee levels, marketing,product development, client relationships, employee matters, compensation programs and compliance activities. As a consequence, our financial conditionand results of operations may be adversely affected by problems stemming from the day-to-day operations of our Affiliates, where weaknesses or failures ininternal processes or systems, legal or regulatory matters, or other operational challenges could lead to a disruption of our Affiliates’ operations, liability totheir clients, exposure to claims or disciplinary action or reputational harm.Some of our Affiliates are limited liability companies or limited partnerships (or equivalent non-U.S. forms) of which we, or entities controlled by us, arethe general partner or managing member. Consequently, to the extent that any of these Affiliates incur liabilities or expenses that exceed their ability to payfor them, we may be directly or indirectly liable for their payment. Similarly, an Affiliate’s payment of distributions to us may be subject to claims bypotential creditors, and an Affiliate may default on distributions that are payable to us. In addition, with respect to each of these Affiliates, we may be heldliable in some circumstances as a control person for the acts of the Affiliate or its employees. Our Affiliates also may face various claims, litigation orcomplaints from time to time and we cannot predict the eventual outcome of such matters, some of which may be resolved in a manner unfavorable to us orour Affiliates, or whether any such matters could become material to a particular Affiliate or us in any reporting period. While we and our Affiliates maintainerrors and omissions and general liability insurance in amounts believed to be adequate to cover potential liabilities, we cannot be certain that we or ourAffiliates will not have claims or related expenses that exceed the limits of available insurance coverage, that the insurers will remain solvent and will meettheir obligations to provide coverage or that insurance coverage will continue to be available to us and our Affiliates with sufficient limits and at areasonable cost. A judgment in excess of available insurance coverage could have an adverse effect on our financial condition and results of operations.We may be involved in legal proceedings and regulatory matters from time to time, any one or combination of which could have an adverse effect on ourreputation, financial condition and results of operations.From time to time in the ordinary course of business, we may be subject to various legal matters, including litigation, regulatory inquiries andadministrative proceedings, which could, whether with or without merit, be time consuming and expensive to defend and could divert management’sattention and resources. While we maintain insurance in amounts we believe to be adequate to cover potential liabilities, we cannot be certain that we willnot have claims or related expenses that exceed the limits of available insurance coverage or that such coverage will continue to be available to us withsufficient limits and at a reasonable cost. The public announcement and potential publicity surrounding any legal proceedings or regulatory matters, as wellas any judgments, findings, settlements or allegations of wrongdoing, could adversely affect our reputation, current and future business relationships,financial condition and results of operations.The agreed-upon expense allocation under our structured partnership interests in which we share in the Affiliate’s revenue without regard to expenses maynot be large enough to pay for all of the respective Affiliate’s operating expenses.In the case of our structured partnership interests in which we share in the Affiliate’s revenue without regard to expenses, the Affiliate allocates aspecified percentage of its revenue to us, while using the remainder of its revenue for operating expenses and for distributions to Affiliate management. In thistype of partnership interest, our agreed allocations may not anticipate changes in the revenue and operating expense base of the Affiliate, and the revenueremaining after our specified share of revenue is allocated to us may not be large enough to cover all of the Affiliate’s operating expenses. While ourdistributions generally have priority, we may elect to defer or forgo the receipt of our share of the Affiliate’s revenue to permit the Affiliate to fund suchoperating expenses, with the aim of maximizing the long-term benefits. We cannot be certain that any such deferral or forbearance would be of any greaterlong-term benefit to us, and such a deferral or forbearance may have an adverse effect on our near- or long-term financial condition and results of operations.Further, unanticipated changes in revenue, operating expenses or other commitments could leave the Affiliate with a shortfall in remaining funds fordistribution to us or to Affiliate management, which may have an adverse effect on our financial condition generally and on our results of operations for theapplicable reporting period.When our structured partnership interest is calculated by reference to the Affiliate’s revenue less certain agreed-upon expenses, we have direct exposure tofluctuations in revenue and operating expenses.In the case of our structured partnership interests that are calculated by reference to an Affiliate’s revenue less certain agreed-upon expenses, we benefitfrom any increase in revenue or any decrease in the expenses that are included in the calculation, but are also directly exposed to any decrease in revenue orany increase in such expenses, which we may not anticipate and which could be significant. Further, the impact of such decreases and increases in revenue orexpenses at these10Table of ContentsAffiliates on our earnings and our stock price could increase if the portion of our earnings derived from such Affiliates increases. Additionally, we may electto defer or forgo the receipt of our share of the Affiliate’s revenue, or to adjust the agreed-upon expenses allocated to us, to permit the Affiliate to fundexpenses in light of unanticipated changes in revenue or operating expenses, with the aim of maximizing the long-term benefits. We cannot be certain thatany such deferral or forbearance would be of any greater long-term benefit to us, and such a deferral or forbearance may have an adverse effect on our near- orlong-term financial condition and results of operations.We may restructure our relationships with Affiliates, and cannot be certain that any such restructurings will benefit us in the near- or long-term.From time to time, we may restructure our relationships with our Affiliates, which could, among other things, include changes to our structuredpartnership interests, including the calculation of our share of revenue and/or operating expenses. Such restructurings may be done in order to address anAffiliate’s succession planning, changes in its operating expense base, strategic planning or other developments. Any restructuring of our interest in anAffiliate may result in additional investments from us or a reduction of our interest in the Affiliate, and could impact our share of the Affiliate’s revenueand/or operating expenses. In addition, certain of our equity method Affiliates have customary rights in certain circumstances to sell a majority interest intheir firm to a third party and to cause us to participate in such sale. Any such changes could have an adverse impact on our financial condition and results ofoperations.Our industry is highly competitive.Our Affiliates compete with a broad range of domestic and foreign investment management firms, including public, private and client-owned investmentadvisors, firms managing passively-managed products, as well as other firms managing active return-oriented strategies, firms associated with securitiesbroker-dealers, financial institutions, insurance companies, private equity firms, sovereign wealth funds and other entities. This competition may reduce thefees that our Affiliates can obtain for investment management services. We believe that our Affiliates’ ability to compete effectively with other firms dependsupon our Affiliates’ strategies, investment performance, reputations, market trends, fee structures and client-servicing capabilities, and the marketing anddistribution of their investment strategies, among other factors. See “Competition” in Item 1. Our Affiliates may not compare favorably with their competitorsin any or all of these categories. From time to time, our Affiliates may also compete with each other for clients. Our Affiliates represent a diverse group ofboutique investment management firms with predominantly active return-oriented strategies, rather than passively-managed products, which typically carrylower fee rates. Changes in investor risk tolerance or investment preferences, such as the recent growth in passively-managed products, could result ininvestor allocation away from active return-oriented strategies.The market for acquisitions of interests in boutique investment management firms is highly competitive. Many other public and private financialservices companies, including commercial and investment banks, private equity firms, sovereign wealth funds, insurance companies and investmentmanagement firms, which may have significantly greater resources than we do, also invest in or buy boutique investment management firms. Further, ourinnovative partnership approach with our Affiliates is designed to provide enhanced incentives for management owners while enabling us to protect ourinterests, including through structured partnership interests and long-term employment agreements with key members of the firm. Target investmentmanagement firms may prefer investments in their firms under terms and structures offered by our competitors. We cannot guarantee that we will be able tocompete effectively with such companies, that new competitors will not enter the market or that such competitors will not make it more difficult or notfeasible for us to maintain existing investments or to make new investments in boutique investment management firms.The failure to consummate announced investments in new investment management firms could have an adverse effect on our financial condition andresults of operations.Consummation of our announced investments is generally subject to a number of closing conditions, contingencies and approvals, including but notlimited to obtaining certain consents of the investment management firms’ clients and applicable regulatory approvals. In the event that an announcedtransaction is not consummated, we may experience a decline in the price of our common stock to the extent that the then-current market price reflects amarket assumption that we will complete the announced transaction. In addition, the fact that a transaction did not close after we announced it publicly maynegatively affect our prospects and our ability to consummate transactions in the future. Finally, we must pay costs related to these investments, includingtransaction fees, even if the investments are not completed, which may have an adverse effect on our financial condition and results of operations.11Table of ContentsWe expect that we will need to raise additional capital in the future, and existing or future resources may not be available to us in sufficient amounts or onacceptable terms.While we believe that our existing cash resources and cash flow from operations will be sufficient to meet our working capital needs for normaloperations for the foreseeable future, our continuing acquisitions of interests in new boutique investment management firms and additional investments inexisting Affiliates may require additional capital. Further, we are contingently liable to make additional purchase payments (of up to $188.2 million through2019) upon the achievement of specified financial targets in connection with certain of our prior acquisitions. As of December 31, 2017, we expected to makepayments of $10.2 million ($8.2 million in 2018) to settle such obligations. We also have committed to co-invest in certain investment partnerships, whichcommitments may be called in future periods.Subject to certain limitations, when we own a controlling interest in an Affiliate, we generally provide the Affiliate equity holders the conditional rightto put equity interests to us over time. Because these obligations are conditional and dependent upon the individual equity holder’s decision to sell his or herequity, it is difficult to predict the frequency and magnitude of these repurchases (our Redeemable non-controlling interests balance at December 31, 2017was $811.9 million). We may also call all or a portion of these equity interests upon, among other events, the termination of an equity holder’s employment,although these rights may be limited or suspended in certain circumstances. In addition, in connection with an investment in an Affiliate accounted for underthe equity method, we entered into an arrangement with a minority owner of the Affiliate that gives such owner the right to sell a portion of its ownershipinterest in the Affiliate to us annually beginning in the fourth quarter of 2018. The purchase price of these conditional purchases will be at fair market valueon the date of the transaction. These obligations may require more cash than is then available from operations. Thus, we may need to raise capital by makingadditional borrowings or by selling shares of our common stock or other equity or debt securities, or to otherwise refinance a portion of these obligations.As of December 31, 2017, we had outstanding senior debt and convertible securities of $2.0 billion. Our level of indebtedness may increase if we fundone or more future investments through borrowings. This additional indebtedness could increase our vulnerability to general adverse economic and industryconditions and would require us to dedicate a greater portion of our cash flow from operations to payments on our indebtedness.The financing activities described above could increase our interest expense, decrease our net income (controlling interest) or dilute the interests of ourexisting stockholders. In addition, our access to further capital, and the cost of capital we are able to access, is influenced by a number of factors, includingthe state of global credit and equity markets, interest rates, credit spreads and our credit ratings. We are rated A3 by Moody’s Investors Service and A- by S&PGlobal Ratings. The rating agencies could decide to modify their outlook or downgrade our ratings or the entire investment management industry, therebymaking it difficult to access capital markets. In addition, a reduction in our credit rating could increase our borrowing costs.Our debt agreements impose certain covenants relating to the conduct of our business, including financial covenants under our credit facilities, and, ifamounts borrowed or outstanding under these agreements were subject to accelerated repayment, we may not have sufficient assets or liquidity to repaysuch amounts in full.Our credit facilities require us to maintain specified financial ratios, including a maximum leverage ratio and a minimum interest coverage ratio, and alsocontain customary affirmative operating covenants and negative covenants that, among other things, place certain limitations on our and our subsidiaries’ability to incur debt, merge or transfer assets and on our ability to create liens. The indentures governing our senior notes also contain restrictions on ourability to merge or transfer assets and on our ability to create liens. The breach of any covenant (either due to our actions or, in the case of financialcovenants, due to a significant and prolonged market driven decline in our operating results) could result in a default under the applicable debt agreement. Inthe event of any such default, lenders that are party to the credit facilities could refuse to make further extensions of credit to us. Further, in the event ofcertain defaults, amounts borrowed under the credit facilities and/or outstanding under the senior notes, together with accrued interest and other fees, couldbecome immediately due and payable. If any indebtedness under the credit facilities or the indentures governing the senior notes was subject to acceleratedrepayment, we may not have sufficient liquid assets to repay such indebtedness in full.We have substantial intangibles on our balance sheet, and any impairment of our intangibles could adversely affect our financial condition and results ofoperations.At December 31, 2017, our total assets were $8.7 billion, of which $4.1 billion were intangible assets, and $3.3 billion were equity method investmentsin Affiliates, an amount primarily composed of intangible assets. Determining the value of intangible assets, and evaluating them for impairment, requiresmanagement to exercise judgment. Our intangible assets may become impaired as a result of any number of factors, including changes in market conditions,losses of investment management contracts or declines in the value of managed assets. We cannot be certain that we will realize the value of such12Table of Contentsintangible assets. An impairment of our intangible assets or an other-than-temporary decline in the value of our equity investments could adversely affect ourfinancial condition and results of operations.We and our Affiliates rely on certain key personnel and cannot guarantee their continued service.We depend on the efforts of our executive officers and our other officers and employees. Our executive officers, in particular, play an important role inthe stability and growth of our existing Affiliates and in identifying potential investment opportunities. We generally do not have employment agreementswith our executive officers, although each has a significant deferred equity interest in the Company and is subject to non-solicitation and non-competitionrestrictions that may be triggered upon their departure. However, there is no guarantee that these officers will remain with the Company.In addition, our Affiliates depend heavily on the services of key principals who, in many cases, have managed their firms for many years. Theseprincipals often are primarily responsible for their firm’s investment decisions. Although we use a combination of economic incentives, transfer restrictionsand, in some instances, non-solicitation, non-competition and employment agreements in an effort to retain key management personnel, there is no guaranteethat these principals will remain with their firms. Since certain Affiliates contribute significantly to our revenue, the loss of key management personnel atthese Affiliates could have a disproportionately adverse impact on our business, financial condition and results of operations.Investment management contracts are subject to termination on short notice.Through our Affiliates, we derive almost all of our asset and performance based fees from clients pursuant to investment management contracts. Whilecertain Affiliates’ private equity and alternative products have long-term commitment periods, many of our Affiliates’ investment management contracts areterminable by the client without penalty upon relatively short notice (typically not longer than 60 days). We cannot be certain that our Affiliates will be ableto retain their existing clients or attract new clients. If clients terminate their investment management contracts or withdraw a substantial amount of funds, itis likely to harm our results of operations. In addition, investment management contracts with mutual funds are subject to annual approval by each fund’sboard of directors.Our or our Affiliates’ controls and procedures and risk management policies may be inadequate, fail or be circumvented, and procedures may beinadequate, and operational risk could adversely affect our or our Affiliates’ reputation and financial position.We and our Affiliates have adopted various controls, procedures, policies and systems to monitor and manage risk in our and their businesses. While wecurrently believe that our and our Affiliates’ operational controls are effective, we cannot provide assurance that those controls, procedures, policies andsystems will always be adequate to identify and manage the internal and external risks in our and our Affiliates’ various businesses. Furthermore, we or ourAffiliates may have errors in business processes or fail to implement proper procedures in operating our or their businesses, which may expose us or ourAffiliates to risk of financial loss or failure to comply with regulatory requirements. We and our Affiliates are also subject to the risk that employees orcontractors, or other third parties, may deliberately seek to circumvent established controls to commit fraud or act in ways that are inconsistent with our or ourAffiliates’ controls, policies and procedures. The financial and reputational impact of control failures can be significant.In addition, our and our Affiliates’ businesses and the markets in which we and our Affiliates operate are continuously evolving. If our or our Affiliates’risk frameworks are ineffective, either because of a failure to keep pace with changes in the financial markets, regulatory requirements, our or our Affiliates’businesses, counterparties, clients or service providers or for other reasons, we or our Affiliates could incur losses, suffer reputational damage or be out ofcompliance with applicable regulatory or contractual mandates or expectations.Failure to maintain and properly safeguard an adequate technology infrastructure may limit our or our Affiliates’ growth, result in losses or disrupt our orour Affiliates’ businesses.Our and our Affiliates’ businesses are reliant upon financial, accounting and technology systems and networks to process, transmit and store information,including sensitive client and proprietary information, and to conduct many business activities and transactions with clients, advisors, regulators, vendorsand other third parties. The failure to implement, maintain and safeguard an infrastructure commensurate with the size and scope of our and our Affiliates’businesses could impede productivity and growth, which could adversely impact our financial condition and results of operations. Further, we and ourAffiliates rely on third parties for certain aspects of our respective businesses, including financial intermediaries and technology infrastructure and serviceproviders, including brokers, custodians, administrators and other agents, and these parties are also susceptible to similar risks.Although we and our Affiliates take protective measures and endeavor to modify them as circumstances warrant, computer systems, software, networksand mobile devices, including those of third parties on whom we and our Affiliates rely, may be13Table of Contentsvulnerable to cyber-attacks, data privacy or security breaches, unauthorized access, theft, misuse, computer viruses or other malicious code and other eventsthat could have a security impact. If any such events occur, it could jeopardize confidential, proprietary or other sensitive information of ours, our Affiliatesand our respective clients, employees or counterparties that may be stored in, or transmitted through, internal or third-party computer systems, networks andmobile devices, or could otherwise cause interruptions or malfunctions in our and our Affiliates’ operations or those of our respective clients orcounterparties, or in the operations of third parties on whom we and our Affiliates rely. The occurrence of any such events could also result in litigation orregulatory action. Despite efforts to ensure the integrity of systems and networks, it is possible that we, our Affiliates or third-party service providers may notbe able to anticipate or to implement effective preventive measures against all threats, especially because the techniques used change frequently and canoriginate from a wide variety of sources. As a result, we or our Affiliates could experience disruption, significant losses, increased costs, reputational harm,regulatory actions or legal liability, any of which could have an adverse effect on our financial condition and results of operations. We or our Affiliates maybe required to spend significant additional resources to modify protective measures or to investigate and remediate vulnerabilities or other exposures, and weor our Affiliates may be subject to litigation, regulatory investigations and potential fines, and financial losses that are either not insured against fully or notfully covered through any insurance that we or our Affiliates maintain. Further, recent well-publicized security breaches at other companies have led toenhanced government and regulatory scrutiny of the measures taken by companies to protect against cyber-attacks and data privacy breaches, and may in thefuture result in heightened security requirements, including additional regulatory expectations for oversight of vendors and service providers.Provisions in our organizational documents, Delaware law and other factors could delay or prevent a change in control of our company.Provisions in our charter and by-laws and anti-takeover provisions under Delaware law could discourage, delay or prevent an unsolicited change incontrol of the Company. These provisions may also have the effect of making it more difficult for third parties to replace our executive officers without theconsent of our Board of Directors. Provisions in our charter and by-laws that could delay or prevent an unsolicited change in control include:•the ability of our Board of Directors to issue preferred stock and to determine the terms, rights and preferences of the preferred stock withoutstockholder approval; and•the prohibition on the right of stockholders to call meetings or act by written consent and limitations on the right of stockholders to presentproposals or make nominations at stockholder meetings.Delaware law also imposes restrictions on mergers and other business combinations between us and any holder of 15 percent or more of our outstandingcommon stock. Further, given our long-term partnership approach, which is designed to preserve our Affiliates’ investment and operational autonomy andindependence, a change in control may also be viewed negatively by our Affiliates, impacting their relationships with us. Additionally, the disposition ofcertain of our Affiliates following a change in control could result in the immediate realization of taxes owed on any excess proceeds above our tax basis inthe relevant Affiliate, which could impact the valuation a third party may apply to us in a change in control.These anti-takeover provisions and other factors may inhibit a change in control in circumstances that could give our stockholders the opportunity torealize a premium over the market price of our common stock, and may result in negative impacts on our financial results in periods following a change incontrol.The sale or issuance of substantial amounts of our common stock, or the expectation that such sales or issuances will occur, could adversely impact theprice of our common stock.The sale or issuance of substantial amounts of our common stock in the public market could adversely impact its price. In connection with our financingactivities, we have issued securities and entered into contracts, including our junior convertible trust preferred securities and equity distribution program, thatmay result in the issuance of our common stock upon the occurrence of certain events. We also have exercisable options outstanding and unvested restrictedstock that have been awarded under our share-based incentive plans. Additionally, we have the right to settle certain Affiliate equity repurchase obligationswith shares of our common stock. Moreover, in connection with future financing activities, we may issue additional convertible securities or shares of ourcommon stock, including through forward equity transactions. Any such issuance of shares of our common stock could have the effect of substantiallydiluting the interests of our current equity holders. In the event that a large number of shares of our common stock are sold or issued in the public market, orthe expectation that such sales or issuances will occur, the price of our common stock may decline as a result.14Table of ContentsOur financial results could be adversely affected by the financial stability of other financial institutions.We and our Affiliates routinely execute transactions with various counterparties in the financial services industry. Historical market volatility highlightsthe interconnection of the global markets and demonstrates how the deteriorating financial condition of one or more institutions may materially andadversely impact the performance of other institutions. We and our Affiliates may be exposed to credit, operational or other risk in the event that acounterparty with whom we or our Affiliates transact defaults on its obligations, or if there are other unrelated systemic failures in the markets.Item 1B.Unresolved Staff CommentsNone.Item 2.PropertiesWe conduct our operations around the world using a combination of leased and owned facilities. While we believe we have suitable property resourcescurrently, we will continue to evaluate our property needs and will complement these resources as necessary.Our principal offices are located at 777 South Flagler Drive, West Palm Beach, Florida; 600 Hale Street, Prides Crossing, Massachusetts; 35 Park Lane,London, England; and 600 Steamboat Road, Greenwich, Connecticut. We also lease offices in Sydney, Australia; Toronto, Canada; Zurich, Switzerland;Hong Kong; and Dubai, United Arab Emirates. In addition, each of our Affiliates leases office space in the city or cities in which it conducts business, asappropriate for their respective business needs from time to time.Item 3.Legal ProceedingsGovernmental and regulatory authorities in the U.S. and other jurisdictions in which we and our Affiliates operate regularly make inquiries andadminister examinations with respect to our and our Affiliates’ compliance with applicable laws and regulations, and from time to time, we and our Affiliatesmay be parties to various claims, lawsuits, complaints, regulatory investigations and other proceedings in the ordinary course of business, certain of which aredescribed in the notes to our Consolidated Financial Statements.Currently, there are no such claims, lawsuits, complaints, regulatory investigations or other proceedings against us or our Affiliates that, in our opinion,would have a material adverse effect on our financial position, liquidity or results of operations. However, there is no assurance as to whether any suchmatters could have a material effect on our or our Affiliates’ financial position, liquidity or results of operations in any future reporting period.Item 4.Mine Safety DisclosuresNot applicable.15Table of ContentsPART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesOur common stock is traded on the New York Stock Exchange (symbol: AMG). The following table sets forth the high and low prices as reported on theNew York Stock Exchange since January 1, 2016 for the periods indicated. High Low2016 First quarter $165.10 $115.97Second quarter 179.85 131.16Third quarter 148.70 131.02Fourth quarter 162.85 130.482017 First quarter $171.65 $139.52Second quarter 169.16 148.81Third quarter 191.98 166.03Fourth quarter 207.67 178.87The closing price for a share of our common stock as reported on the New York Stock Exchange on February 21, 2018 was $189.03. As of February 21,2018, there were 14 stockholders of record, including banks, brokers and other financial institutions holding shares in omnibus accounts for their customers(in total representing substantially all of the beneficial holders of our common stock).We declared regular cash dividends of $0.80 per share ($0.20 per share per quarter) during the fiscal year ended December 31, 2017. On January 29,2018, we announced an increase to our regular cash dividend, with a first-quarter cash dividend of $0.30 per share, payable February 23, 2018 to all holdersof record of our common stock as of February 8, 2018. We expect to continue paying quarterly cash dividends, although the declaration of future dividendswill be at the discretion of our Board of Directors.Issuer Purchases of Equity SecuritiesPeriod Total Number ofShares Purchased(1) Average Price PaidPer Share Total Number of SharesPurchased as Part ofPublicly Announced Plans orPrograms Average Price PaidPer Share Maximum Number of Sharesthat May Yet Be PurchasedUnder Outstanding Plans orPrograms(2)October 1-31, 2017 72,200 $186.28 72,200 $186.28 2,225,072November 1-30, 2017 277,383 185.36 243,046 185.34 1,982,026December 1-31, 2017 402,702 201.97 402,702 201.97 1,579,324 Total 752,285 194.34 717,948 194.76 ____________________________(1) Includes shares surrendered, if any, to the Company to satisfy tax withholding and/or option exercise price obligations in connection with stock swapoption exercise transactions.(2) Our Board of Directors authorized share repurchase programs in January 2018, January 2017 and May 2015, authorizing us to repurchase up to 3.4million, 1.9 million and 3.0 million shares of our common stock, respectively, and these authorizations have no expiry. Purchases may be made fromtime to time, at management’s discretion, in the open market or in privately negotiated transactions, including through the use of derivatives andaccelerated share repurchase programs. As of December 31, 2017, we had repurchased all of the shares of the May 2015 authorized amount. As of theJanuary 2018 authorization, there were a total of 5.0 million shares remaining available for repurchase under the January 2018 and January 2017programs.16Table of ContentsPerformance GraphThe following graph compares the cumulative stockholder return on our common stock from December 31, 2012 through December 31, 2017, with thecumulative total return, during the same period, on the Standard & Poor’s 500 Index and a peer group comprising AllianceBernstein Holding L.P., AmeripriseFinancial, Inc., BlackRock, Inc., Eaton Vance Corp., Franklin Resources, Inc., Invesco Ltd., Lazard Ltd., Legg Mason, Inc. and T. Rowe Price Group, Inc.(collectively, the “New Peer Group”). Prior to this year, our peer group (the “Old Peer Group”) also included Waddell & Reed Financial, Inc. and did notinclude Lazard Ltd. Our peer group was revised in 2017 to reflect companies with global size and scale, as well as market capitalizations, that are more in linewith our own. The comparison below assumes the investment of $100 on December 31, 2012 in our common stock and each of the comparison indices and, ineach case, assumes reinvestment of all dividends. 17Table of ContentsItem 6.Selected Financial DataThe following table presents selected financial data for the last five years. This data should be read in conjunction with, and is qualified in its entirety byreference to, the Consolidated Financial Statements and accompanying notes included elsewhere in this Annual Report on Form 10-K. For the Years Ended December 31,(in millions, except as noted and per share data) 2013 2014 2015 2016 2017Operating Performance Measures Assets under management (in billions) $537.3 $620.2 $611.3 $688.7 $836.3Average assets under management (in billions) 483.8 585.9 623.9 655.6 779.2Aggregate fees 3,907.4 4,203.1 4,140.1 4,296.3 5,545.8Financial Performance Measures Revenue $2,188.8 $2,510.9 $2,484.5 $2,194.6 $2,305.0Net income (controlling interest) 338.8 433.9 509.5 472.8 689.5Earnings per share (diluted) $6.17 $7.70 $9.17 $8.57 $12.03Dividends per share $— $— $— $— $0.80Supplemental Financial Performance Measures(1) Adjusted EBITDA (controlling interest) $819.9 $900.8 $942.2 $945.5 $1,116.2Economic net income (controlling interest) 549.8 629.2 687.2 703.6 824.4Economic earnings per share $9.94 $11.18 $12.47 $12.84 $14.60Balance Sheet Data Total assets $6,300.3 $7,683.5 $7,769.4 $8,749.1 $8,702.1Long-term debt 1,365.2 1,880.3 1,879.4 2,109.6 1,854.7Redeemable non-controlling interests 641.9 645.5 612.5 673.5 811.9Total equity 3,144.6 3,643.2 3,769.1 4,426.5 4,578.5__________________________(1) Adjusted EBITDA (controlling interest), Economic net income (controlling interest) and Economic earnings per share are non-GAAP performancemeasures and are discussed in “Supplemental Financial Performance Measures” in Item 7.18Table of ContentsItem 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following Management’s Discussion and Analysis of Financial Condition and Results of Operations of Affiliated Managers Group, Inc. and itssubsidiaries (collectively, the “Company”) should be read in conjunction with the “Forward-Looking Statements” section set forth in Part I and the “RiskFactors” section set forth in Item 1A of Part I of this Annual Report on Form 10-K and in any more recent filings with the SEC, each of which describesthese risks, uncertainties and other important factors in more detail.Executive OverviewThe following executive overview summarizes the significant trends affecting our results of operations and financial condition. This overview and theremainder of this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with theConsolidated Financial Statements of the Company and the notes thereto contained elsewhere in this Annual Report on Form 10-K.We are a global asset management company with equity investments in leading boutique investment management firms, which we refer to as our“Affiliates.” Our innovative partnership approach allows each Affiliate’s management team to own significant equity in their firm and maintain operationalautonomy. Our strategy is to generate shareholder value through the growth of existing Affiliates, as well as through investments in new Affiliates andadditional investments in existing Affiliates. In addition, we provide centralized assistance to our Affiliates in strategic matters, marketing, distribution,product development and operations. As of December 31, 2017, our assets under management were $836.3 billion in more than 550 investment productsacross a broad range of active return-oriented strategies.We hold meaningful equity interests in each of our Affiliates and maintain the same partnership approach, provide support and assistance insubstantially the same manner, and our operating model is generally the same for all Affiliates. Furthermore, our Affiliates are all impacted by similarmarketplace factors and operational trends. Therefore, our aggregate operating measures of assets under management, average assets under management andaggregate fees, which incorporate the assets under management and fees of all of our Affiliates, are important in providing management with a morecomprehensive view of the operating performance and material trends across our entire business.The following table presents our key operating performance measures: For the Years Ended December 31,(in billions, except as noted) 2016 2017 % ChangeAssets under management(1) $688.7 $836.3 21%Average assets under management(1) 655.6 779.2 19%Aggregate fees (in millions)(2) 4,296.3 5,545.8 29%__________________________(1) Assets under management is presented on a current basis without regard to the timing of the inclusion of an Affiliate’s financial results in ourConsolidated Financial Statements. Average assets under management provides a more meaningful relationship to our financial and operating results asit reflects the particular billing patterns of Affiliate sponsored products and client accounts and corresponds with the timing of the inclusion of anAffiliate's financial and operating results in our Consolidated Financial Statements.(2) Aggregate fees consists of the total asset and performance based fees earned by all of our Affiliates. Aggregate fees is an operating measure and isprovided in addition to, but not as a substitute for, our financial performance measures. In the fourth quarter of 2017, we renamed our operating measureformerly referred to as aggregate revenue to aggregate fees. There was no change in the calculation of this measure.Assets under ManagementThrough our Affiliates, we manage active return-oriented strategies, rather than passively-managed products, which typically carry lower fee rates. Wecontinue to see client demand for active return-oriented strategies, particularly in alternative and multi-asset strategies, reflecting continued investor demandfor returns that are less correlated to traditional equity and fixed income markets. In addition, we see both U.S. and non-U.S. investors increasing theirallocations to global equities strategies. Investor demand for passively-managed products has continued, particularly for the large cap U.S. equity portions ofclient portfolios, and we have experienced outflows in U.S. equity strategies consistent with this industry-wide trend. We19Table of Contentsexpect client demand for alternative, global equities and multi-asset strategies to continue, and believe the best-performing active equity managers (whetherglobal-, regional- or country-specific) will continue to have significant opportunities to grow from net client cash inflows. We believe we are well-positionedto benefit from these trends.The following charts provide information regarding the composition of our assets under management by active return-oriented strategy as of December31, 2016 and 2017:Assets under Management by Strategy(in billions)__________________________(1) Alternatives primarily include assets under management in fixed income, equity relative value, systematic diversified, private equity and real assets, andother alternative strategies. Alternative strategies generate earnings from (i) asset based fees from products subject to lock-ups or similar restrictions, (ii)asset based fees from products not subject to such restrictions and/or (iii) performance fees and carried interest.(2) Global equities include emerging markets strategies, which accounted for 9% of our aggregate assets under management as of December 31, 2016 and2017.The following table presents changes in our assets under management by active return-oriented strategy:(in billions)Alternatives Global Equities U.S. Equities Multi-asset & Other TotalDecember 31, 2016$252.4 $233.9 $110.1 $92.3 $688.7 Client cash inflows and commitments63.4 35.5 18.3 17.8 135.0 Client cash outflows and realizations(43.0) (40.8) (30.9) (15.6) (130.3) Net client cash flows20.4 (5.3) (12.6) 2.2 4.7 New investments30.6 1.5 — 3.3 35.4 Market changes17.6 57.1 18.4 7.1 100.2 Foreign exchange(1)4.5 6.7 0.3 1.5 13.0 Other(1.5) (0.5) (0.1) (3.6) (5.7)December 31, 2017$324.0 $293.4 $116.1 $102.8 $836.3__________________________(1) Foreign exchange reflects the impact of translating into U.S. dollars the assets under management of Affiliates whose functional currency is not the U.S.dollar.20Table of ContentsThe following charts provide information regarding the composition of our assets under management by client type as of December 31, 2016 and 2017:Assets under Management by Client Type(in billions)The following table presents changes in our assets under management by client type:(in billions) Institutional Retail High Net Worth TotalDecember 31, 2016 $401.2 $188.3 $99.2 $688.7 Client cash inflows and commitments 62.6 55.4 17.0 135.0 Client cash outflows and realization (70.6) (45.6) (14.1) (130.3) Net client cash flows (8.0) 9.8 2.9 4.7 New investments 31.0 1.2 3.2 35.4 Market changes 58.5 29.0 12.7 100.2 Foreign exchange(1) 7.6 4.7 0.7 13.0 Other (1.7) (0.3) (3.7) (5.7)December 31, 2017 $488.6 $232.7 $115.0 $836.3_________________________(1) Foreign exchange reflects the impact of translating into U.S. dollars the assets under management of Affiliates whose functional currency is not the U.S.dollar.In addition to assets under management, we also report average assets under management. This measure provides a more meaningful relationship toaggregate fees as it reflects both the particular billing patterns of Affiliate sponsored products and client accounts and corresponds with the timing of theinclusion of an Affiliate’s financial and operating results in our Consolidated Financial Statements. Average assets under management were $779.2 billion in2017, an increase of $123.6 billion or 19% compared to 2016.Aggregate FeesAggregate fees consists of the total asset and performance based fees earned by all of our Affiliates. Asset based fees include advisory and other feesearned by our Affiliates for services provided to their clients and are typically determined as a percentage of the value of a client’s assets under management.Performance fees are based on investment performance, typically on an absolute basis or relative to a benchmark, and are recognized when they are earned(i.e., when they become billable to customers and are not subject to claw-back). Our ratio of asset based fees to average assets under management (“assetbased fee ratio”) is calculated as asset based fees divided by average assets under management. Our asset based fee ratios may change as a result of newinvestments, client cash flows, market changes, foreign exchange or changes in contractual fees.Our aggregate fees are generally determined by the level of our average assets under management, the composition of these assets across our activereturn-oriented strategies that realize different asset based fee ratios, and performance fees. Aggregate fees were $5,545.8 million in 2017, an increase of$1,249.5 million or 29% compared to 2016. The increase in our21Table of Contentsaggregate fees was the result of an increase in asset based fees of $778.4 million or 18% due to a 19% increase in our average assets under management andan increase in performance fees of $471.1 million or 11%.In 2017, we experienced increases in average assets under management across all of our active return-oriented strategies, and, in particular, ouralternative strategies, where average assets under management increased 31%. Assets under management in our alternative strategies increased due toinvestments in new Affiliates, net client cash inflows, market changes and foreign exchange. Our alternative strategies generally have higher asset based feeratios than our other strategies, which resulted in an increase in our total asset based fee ratio.Financial and Supplemental Financial Performance MeasuresThe following table presents our key financial and supplemental financial performance measures: For the Years Ended December 31,(in millions) 2016 2017 % ChangeNet income (controlling interest) $472.8 $689.5 46%Adjusted EBITDA (controlling interest)(1) 945.5 1,116.2 18%Economic net income (controlling interest)(1) 703.6 824.4 17%__________________________(1) Adjusted EBITDA (controlling interest) and Economic net income (controlling interest) are non-GAAP performance measures and are discussed in“Supplemental Financial Performance Measures.”Adjusted EBITDA (controlling interest) is an important supplemental financial performance measure for management as it provides a comprehensiveview of our share of the financial performance of our business before interest, taxes, depreciation, amortization, impairments and adjustments to ourcontingent payment obligations. Conversely, our most directly comparable GAAP performance measures, Operating income and Income before income taxes,include the non-controlling interest’s share of financial performance.Our economic interest in Affiliates in which we own a controlling interest is generally greater than in Affiliates in which we do not own a controllinginterest. While our aggregate fees increased 29% in 2017, our Adjusted EBITDA (controlling interest) increased $170.7 million or 18%, as we experienced agreater proportion of growth in aggregate fees at Affiliates in which we do not own a controlling interest and, therefore, own less of an economic interest,including our 2016 investments in new Affiliates.While Adjusted EBITDA (controlling interest) increased $170.7 million or 18% in 2017, our Net income (controlling interest) increased $216.7 millionor 46%, primarily due to a provisional one-time net benefit from changes in U.S. tax laws of $194.1 million, partially offset by a $93.1 million expense ($57.4million net of tax), associated with the impairment of one of our Affiliates accounted for under the equity method.We consider Economic net income (controlling interest) to be an important measure of our financial performance, as we believe it best represents ourperformance after tax and before our share of non-cash expenses relating to our acquisition of interests in our Affiliates. Our Economic net income(controlling interest), which excludes impairments and the impact of changes in U.S. tax laws, among other things, increased $120.8 million or 17% in 2017,consistent with the increase in Adjusted EBITDA (controlling interest).Results of OperationsThe following discussion includes the financial results of our consolidated and equity method Affiliates. Our consolidated Affiliates’ financial results areincluded in our Revenue, Operating expenses and Non-operating (income) and expenses, and our share of our equity method Affiliates’ financial results isreported (net of intangible amortization and impairments) in Income from equity method investments in Operating income.RevenueWe derive most of our Revenue from asset and performance based fees from investment management services provided by our consolidated Affiliates.Asset based fees include advisory and other fees, which are typically determined as a percentage fee charged on the value of a client’s assets undermanagement. Performance fees are based on investment performance,22Table of Contentstypically on an absolute basis or relative to a benchmark, and are recognized when they are earned (i.e., when they become billable to customers and are notsubject to claw-back). Performance fees are generally billed less frequently than asset based fees and, although performance fees inherently depend oninvestment performance and will vary from period to period, we anticipate performance fees will be a recurring component of our Revenue.Our Revenue is generally determined by the level of our consolidated Affiliate average assets under management, the composition of these assets acrossour Affiliate sponsored products and client accounts that realize different asset based fee ratios and performance fees. Consolidated Affiliate average assetsunder management reflects the particular billing patterns of products and client accounts and, therefore, provides a more meaningful relationship to the assetbased fee portion of our Revenue. Our ratio of consolidated Affiliate asset based fees to consolidated Affiliate average assets under management(“consolidated Affiliate asset based fee ratio”) may change as a result of new investments, client cash flows, market changes, foreign exchange rate changes orchanges in contractual fees.The following table summarizes our consolidated Affiliate average assets under management and Revenue: For the Years Ended December 31,(in millions, except as noted)2015 2016 % Change 2017 % ChangeConsolidated Affiliate average assets under management (inbillions)$396.4 $373.4 (6)% $406.5 9%Revenue$2,484.5 $2,194.6 (12)% $2,305.0 5%Our Revenue increased $110.4 million or 5% in 2017, due to a $129.1 million or 6% increase from asset based fees, partially offset by a $18.7 million or1% decrease from performance fees. The increase in asset based fees was due to a 9% increase in consolidated Affiliate average assets under managementwhere we experienced increases in assets under management, primarily from market changes and foreign exchange, partially offset by net client cashoutflows. The increase in asset based fees was partially offset by a 3% decline in our consolidated Affiliate asset based fee ratio. The decline in ourconsolidated Affiliate asset based fee ratio was due to a change in the composition of our average assets under management between Affiliate sponsoredproducts and client accounts that realize comparatively higher asset based fee ratios and Affiliate sponsored products and client accounts that realizecomparatively lower asset based fee ratios.Our Revenue decreased $289.9 million or 12% in 2016. This decrease was primarily due to a decrease in consolidated Affiliate average assets undermanagement at existing Affiliates, which reduced asset based fees $186.2 million or 7%. This decrease was also the result of a decline in our consolidatedAffiliate asset based fee ratio at existing Affiliates, which reduced asset based fees $126.0 million or 5%, including a reduction in asset based fees related torenewal commissions at one of our Affiliates in the UK. The reduction in asset based fees related to renewal commissions was the result of a regulatory changeand was offset by a decline in distribution expenses at the Affiliate that reduced our Selling, general and administrative expenses. These decreases werepartially offset by an increase in Revenue from the full-year impact of our 2015 investments in new Affiliates of $16.8 million or 1%, as well as an increase inperformance fees at existing Affiliates of $5.5 million. The decline in our consolidated Affiliate asset based fee ratio was due to a change in the compositionof our average assets under management between Affiliate sponsored products and client accounts that realize comparatively higher asset based fee ratios andAffiliate sponsored products and client accounts that realize comparatively lower asset based fee ratios, as well as the aforementioned decline in renewalcommissions.Operating ExpensesThe following table summarizes our consolidated operating expenses: For the Years Ended December 31,(in millions) 2015 2016 % Change 2017 % ChangeCompensation and related expenses $1,027.7 $932.4 (9)% $979.0 5 %Selling, general and administrative 443.8 398.1 (10)% 373.1 (6)%Intangible amortization and impairments 115.4 110.2 (5)% 86.4 (22)%Depreciation and other amortization 18.8 19.5 4 % 20.3 4 %Other operating expenses (net) 43.8 29.1 (34)% 40.5 39 %Total operating expenses $1,649.5 $1,489.3 (10)% $1,499.3 1 %23Table of ContentsOur operating expenses are primarily attributable to the non-controlling interests of our consolidated Affiliates in which we share in revenue withoutregard to expenses. For these Affiliates, the amount of their operating expenses attributable to the non-controlling interests, including compensation, isgenerally determined by the percentage of revenue allocated to operating expenses as part of the structured partnership interests in place at the respectiveAffiliate. Accordingly, increases in revenue generally will increase a consolidated Affiliates’ expenses attributable to the non-controlling interest anddecreases in revenue will generally decrease a consolidated Affiliates’ expenses attributable to the non-controlling interest.Compensation and related expenses increased $46.6 million or 5% in 2017, primarily due to increases in compensation expenses at Affiliates of $35.0million or 4% and compensation expenses associated with Affiliate equity transactions of $8.5 million or 1%. These changes primarily relate to the non-controlling interests.Compensation and related expenses decreased $95.3 million or 9% in 2016, primarily due to decreases in compensation expenses at existing Affiliates of$78.3 million or 8% and compensation expenses associated with Affiliate equity transactions of $28.7 million or 3%. These decreases were partially offset byan increase in compensation expenses from the full-year impact in 2016 of our 2015 investments in new Affiliates of $7.0 million or 1%. These changesprimarily relate to the non-controlling interests.Selling, general and administrative expenses decreased $25.0 million or 6% in 2017, primarily due to a 2016 expense recorded by and attributable toThird Avenue Management, LLC in connection with claims relating to the Third Avenue Focused Credit Fund of $15.0 million or 4%, which did not recur in2017, as well as a $5.8 million or 1% reduction of expenses related to wealth management initiatives and a $5.7 million or 1% reduction in distributionexpenses, related to commissions at certain of our Affiliates in the UK.Selling, general and administrative expenses decreased $45.7 million or 10% in 2016, primarily due to decreases in sub-advisory and distributionexpenses, including renewal commissions, of $57.7 million or 13% at our Affiliates sponsoring retail products. This decrease was partially offset by a reserveof $15.0 million or 3% recorded by and attributable to Third Avenue Management, LLC in connection with a proposed resolution of claims relating to theThird Avenue Focused Credit Fund.Intangible amortization and impairments decreased $23.8 million or 22% in 2017, due to a $16.0 million or 15% decrease from a change in the pattern ofeconomic benefit for certain assets and a $7.8 million or 7% decrease from certain assets being fully amortized.Intangible amortization and impairments decreased $5.2 million or 5% in 2016, primarily due to certain assets being fully amortized in 2015, whichdecreased intangible amortization $13.2 million or 11%, partially offset by increases in intangible amortization of definite-lived assets at existing Affiliatesof $5.5 million or 5%.There were no significant changes in Depreciation and other amortization in 2017 or 2016.Other operating expenses (net) increased $11.4 million or 39% in 2017 and decreased $14.7 million or 34% in 2016. In 2017, this increase was primarilydue to a decrease in net gains on Affiliates’ consolidated investment products of $8.1 million. In 2016, this decrease was primarily due to net gains onAffiliates’ consolidated investment products of $12.5 million.Income from Equity Method InvestmentsWhen we do not own a controlling interest in an Affiliate, but have significant influence, we account for our interest in the Affiliate under the equitymethod. For these Affiliates, we use structured partnership interests in which our share of the Affiliate’s earnings or losses is contractually calculated,allocated and distributed using a formula whereby our share is based on a percentage of the Affiliate’s revenue less certain agreed-upon expenses. This typeof partnership interest allows us to benefit from any increase in revenue or any decrease in the expenses that are included in the calculation, but also directlyexposes us to any decrease in revenue or any increase in such expenses. We also use structured partnership interests in which our share of the Affiliate’searnings or losses is contractually calculated, allocated and distributed using a formula whereby our share is based on a percentage of the Affiliate’s revenuewithout regard to expenses. In this type of partnership interest, our contractual share of revenue generally has priority over distributions to Affiliatemanagement. Our share of earnings from these Affiliates, net of amortization and impairments, is included in Income from equity method investments in ourConsolidated Statements of Income.Our equity method Affiliates derive most of their revenue from asset and performance based fees from investment management services. Asset based feesinclude advisory and other fees, which are typically determined as a percentage fee charged on the value of a client’s assets under management. Performancefees are based on investment performance, typically on an absolute basis or relative to a benchmark, and are recognized when they are earned (i.e., when theybecome billable to customers and are not subject to claw-back). Performance fees are generally billed less frequently than asset based fees and,24Table of Contentsalthough performance fees inherently depend on investment performance and will vary from period to period, we anticipate performance fees will be arecurring component of our Income from equity method investments.Equity method revenue incorporates the total asset and performance based fees earned by all our equity method Affiliates. Equity method revenue is anoperating measure and is provided in addition to, but not as a substitute for, Income from equity method investments or other financial performance measures.Our equity method revenue is generally determined by the level of our equity method Affiliate average assets under management, the composition of theseassets across our Affiliate sponsored products and client accounts that realize different asset based fee ratios and performance fees. Equity method Affiliateaverage assets under management provides a more meaningful relationship to the asset based fee portion of our equity method revenue, as it reflects theparticular billing patterns of products and client accounts and corresponds with the timing of the inclusion of an Affiliate’s financial and operating results inour Consolidated Financial Statements. Our ratio of equity method Affiliate asset based fees to equity method Affiliate average assets under management(“equity method Affiliate asset based fee ratio”) may change as a result of new investments, client cash flows, market changes, foreign exchange rate changesor changes in contractual fees.Additional investments in new or existing equity method Affiliates will generally impact our financial results in the year of investment and, dependingupon the timing, in the following year when the full-year financial results of the investment are reflected in our Consolidated Financial Statements.The following table summarizes equity method Affiliate average assets under management and equity method revenue, as well as equity methodearnings and equity method intangible amortization and impairments, which in aggregate form Income from equity method investments. For the Years Ended December 31,(in millions, except as noted) 2015 2016 % Change 2017 % ChangeOperating Performance Measures Equity method Affiliate average assets under management (inbillions) $227.5 $282.2 24% $372.7 32 %Equity method revenue(1) $1,655.6 $2,101.7 27% $3,240.8 54 % Financial Performance Measures Equity method earnings $323.2 $388.0 20% $501.4 29 %Equity method intangible amortization and impairments (34.3) (59.2) 73% (199.2) 236 %Income from equity method investments $288.9 $328.8 14% $302.2 (8)%__________________________(1) Equity method revenue is not derived from and differs from the revenue of our equity method Affiliates reported in Note13 to our Consolidated Financial Statements, as it does not include the financial impact of any sponsored investment products or entities that may needto be consolidated by our equity method Affiliates under GAAP and it excludes asset and performance based fees of new equity method Affiliates prior tothe date of closing of the respective investment.Our equity method revenue increased $1,139.1 million or 54% in 2017, due to a $649.1 million or 31% increase from asset based revenue and a $490.0million or 23% increase from performance fees. The increase in asset based revenue was due to a 32% increase in equity method Affiliate average assets undermanagement where we experienced increases in assets under management from investments in new Affiliates, net client cash flows, market changes andforeign exchange. The increase in asset based revenue was also due to a 3% increase in our equity method Affiliate asset based fee ratio due to a change in thecomposition of our average assets under management between Affiliate sponsored products and client accounts that realize comparatively higher asset basedfee ratios and Affiliate sponsored products and client accounts that realize comparatively lower asset based fee ratios. Performance fees increased due to thefull-year impact in 2017 of our 2016 investments in new Affiliates and due to increases in performance fees at existing Affiliates.While equity method revenue increased 54% in 2017, equity method earnings increased $113.4 million or 29%, primarily due to our 2016 investmentsin new Affiliates, in which we own less of the economic interests.Equity method intangible amortization and impairments increased $140.0 million in 2017, primarily as a result of a $93.1 million impairment of one ofour Affiliates (see “Critical Accounting Estimates and Judgments”) and a $41.0 million increase from the full-year impact in 2017 of our 2016 investments innew Affiliates.25Table of ContentsOur equity method revenue increased $446.1 million or 27% in 2016. This increase was primarily due to an increase in revenue from the full-year impactof our 2015 investments and the partial-year impact of our 2016 investments in new Affiliates of $352.5 million or 21%. The increase was also the result of anincrease in equity method Affiliate average assets under management at existing Affiliates, which increased asset based fees $133.3 million or 8%. Theseincreases were partially offset by a decline in our equity method Affiliate asset based fee ratio at existing Affiliates, which reduced asset based fees $21.7million or 1%, as well as a decrease in performance fees at existing Affiliates of $18.0 million or 1%. The decline in our equity method Affiliate asset basedfee ratio was due to a change in the composition of our average assets under management between Affiliate sponsored products and client accounts thatrealize comparatively higher asset based fee ratios and Affiliate sponsored products and client accounts that realize comparatively lower asset based feeratios.While equity method revenue increased 27% in 2016, equity method earnings increased $64.8 million or 20% in 2016, primarily due to our 2015 and2016 investments in new Affiliates, in which we own less of the economic interests, and an increase in expenses at Affiliates where our structured partnershipinterest is calculated by reference to the Affiliate’s revenue less certain agreed-upon expenses.Equity method intangible amortization and impairments increased $24.9 million or 73% in 2016, primarily as a result of a $21.5 million increase fromthe full-year impact in 2016 of our 2015 investments in new Affiliates and the partial-year impact of our 2016 investments in new Affiliates.Non-Operating (Income) and ExpensesThe following table summarizes non-operating income and expense data: For the Years Ended December 31,(in millions) 2015 2016 % Change 2017 % ChangeInvestment and other income $(15.3) $(33.8) 121 % $(60.0) 78 %Interest expense 88.9 89.4 1 % 85.3 (5)%Imputed interest expense and contingent paymentarrangements (40.3) 3.9 N.M.(1) 15.5 N.M.(1)Income tax expense 263.4 235.6 (11)% 58.4 (75)%__________________________(1) Percentage change is not meaningful.Investment and other income increased $26.2 million or 78% in 2017, due to a $19.5 million increase in the fair value of Affiliates’ investments and a$6.7 million increase in net realized gains.Investment and other income increased $18.5 million or 121% in 2016, primarily due to a $11.9 million increase in net realized gains and a $7.0 millionincrease in the fair value of Affiliates’ investments.Interest expense decreased $4.1 million or 5% in 2017, primarily due to the redemption of our 6.375% senior unsecured notes due 2042 in August 2017,which decreased Interest expense $5.3 million. There was no significant change in our Interest expense in 2016 as compared to 2015.Imputed interest expense and contingent payment arrangements increased $11.6 million in 2017, primarily due to a $6.6 million expense on therevaluation of our contingent payment arrangements as compared to a $2.8 million gain recorded in 2016.Imputed interest expense and contingent payment arrangements decreased $44.2 million in 2016, primarily due to a $44.7 million gain on therevaluation of our contingent payment arrangements in 2015 as compared to a $2.8 million gain recorded in 2016.Income tax expense decreased $177.2 million or 75% in 2017, primarily due to a provisional one-time net benefit of $194.1 million from changes in U.S.tax laws, partially offset by an increase in income tax expense due to an increase in Income before income taxes attributable to the controlling interest. Thenet benefit from changes in U.S tax laws was primarily due to the re-measurement of our deferred tax liabilities associated with our intangible assets andconvertible securities.Income tax expense decreased $27.8 million or 11% in 2016, primarily due to a decrease in Income before income taxes attributable to the controllinginterest, as well as the effect of foreign operations.26Table of ContentsNet IncomeThe previously discussed changes in revenue and expenses had the following effect on Net income: For the Years Ended December 31,(in millions) 2015 2016 % Change 2017 % ChangeNet income $827.2 $739.0 (11)% $1,008.7 36%Net income (non-controlling interests) 317.7 266.2 (16)% 319.2 20%Net income (controlling interest) 509.5 472.8 (7)% 689.5 46%Supplemental Financial Performance MeasuresAdjusted EBITDA (controlling interest)As supplemental information, we provide a non-GAAP measure to which we refer as Adjusted EBITDA (controlling interest). Adjusted EBITDA(controlling interest) is an important supplemental financial performance measure for management as it provides a comprehensive view of our share of thefinancial performance of our business before interest, taxes, depreciation, amortization, impairments and adjustments to our contingent payment obligations.This non-GAAP performance measure is provided in addition to, but not as a substitute for, Net income (controlling interest) or other GAAP performancemeasures.The following table provides a reconciliation of Net income (controlling interest) to Adjusted EBITDA (controlling interest): For the Years Ended December 31,(in millions) 2015 2016 2017Net income (controlling interest) $509.5 $472.8 $689.5Interest expense 88.9 89.4 85.3Imputed interest expense and contingent payment arrangements(1) (40.3) 3.9 15.5Income taxes(2) 257.8 229.2 50.4Depreciation and other amortization 7.9 7.7 10.1Intangible amortization and impairments(3) 118.4 142.5 265.4Adjusted EBITDA (controlling interest) $942.2 $945.5 $1,116.2__________________________(1) For the years ended December 31, 2015, 2016 and 2017, Imputed interest expense and contingent payment arrangements include gains from adjustmentsto our contingent payment obligations of $44.7 million ($27.8 million net of tax), $2.8 million ($1.7 million net of tax) and expenses from adjustmentsto our contingent payment obligations of $6.6 million ($4.1 million net of tax), respectively.(2) For the year end December 31, 2017, Income taxes include a provisional one-time net benefit of $194.1 million from changes in U.S tax laws.(3)Our reported Intangible amortization and impairments includes amortization attributable to our non-controlling interests. For our equity methodAffiliates, we do not separately report Intangible amortization and impairments in our Consolidated Statements of Income. Amortization andimpairments for these Affiliates is reported in Income from equity method investments. Equity method intangible amortization and impairments includesa $93.1 million expense in 2017 associated with the impairment of one of our Affiliates.The following table summarizes the Intangible amortization and impairments shown above:27Table of Contents For the Years Ended December 31,(in millions) 2015 2016 2017Reported Intangible amortization and impairments $115.4 $110.2 $86.4Intangible amortization (non-controlling interests) (31.3) (26.9) (20.2)Equity method intangible amortization and impairments 34.3 59.2 199.2Total $118.4 $142.5 $265.4Economic Net Income (controlling interest) and Economic Earnings Per ShareAs supplemental information, we also provide non-GAAP performance measures to which we refer as Economic net income (controlling interest) andEconomic earnings per share. We consider Economic net income (controlling interest) and Economic earnings per share to be important measures of ourfinancial performance, as we believe they best represent performance before our share of non-cash expenses relating to our acquisition of interests in ourAffiliates, and they are, therefore, employed as our principal performance measures. Economic net income (controlling interest) and Economic earnings pershare are used by our management and Board of Directors as our principal performance benchmarks, including as one of the measures for aligning executivecompensation with stockholder value. These measures are provided in addition to, but not as substitutes for, Net income (controlling interest) and Earningsper share (diluted) or other GAAP performance measures.Under our Economic net income (controlling interest) definition, we add to Net income (controlling interest) our share of pre-tax intangible amortizationand impairments (including the portion attributable to equity method investments in Affiliates), deferred taxes related to intangible assets and othereconomic items, which include non-cash imputed interest (principally related to the accounting for convertible securities and contingent paymentarrangements) and certain Affiliate equity expenses. For the year ended December 31, 2017, we have also excluded from Economic net income (controllinginterest) a provisional one-time net benefit from changes in U.S. tax laws. We add back intangible amortization and impairments attributable to acquiredclient relationships because these expenses do not correspond to the changes in value of these assets, which do not diminish predictably over time. Theportion of deferred taxes generally attributable to intangible assets (including goodwill) is added back because we believe it is unlikely these accruals will beused to settle material tax obligations. We add back non-cash imputed interest and reductions or increases in contingent payment arrangements to betterreflect our contractual interest obligations. We add back non-cash expenses relating to certain transfers of equity between Affiliate partners when thesetransfers have no dilutive effect to shareholders. We have excluded the one-time impact of the changes in U.S. tax laws to ensure comparability with prior andfuture periods.Economic earnings per share represents Economic net income (controlling interest) divided by the Average shares outstanding (adjusted diluted). In thiscalculation, the potential share issuance in connection with our convertible securities is measured using a “treasury stock” method. Under this method, onlythe net number of shares of common stock equal to the value of these convertible securities in excess of par, if any, is deemed to be outstanding. We believethe inclusion of net shares under a treasury stock method best reflects the benefit of the increase in available capital resources (which could be used torepurchase shares of common stock) that occurs when these securities are converted and we are relieved of our debt obligation. This method does not takeinto account any increase or decrease in our cost of capital in an assumed conversion.The following table provides a reconciliation of Net income (controlling interest) to Economic net income (controlling interest): For the Years Ended December 31,(in millions, except per share data) 2015 2016 2017Net income (controlling interest) $509.5 $472.8 $689.5Intangible amortization and impairments(1) 118.4 142.5 265.4Intangible-related deferred taxes(2) 77.7 84.3 48.8Other economic items(3)(4) (18.4) 4.0 14.8Changes in U.S. tax laws(5) — — (194.1)Economic net income (controlling interest) $687.2 $703.6 $824.4Average shares outstanding (diluted) 57.2 57.0 58.6Assumed issuance of junior convertible securities shares (2.2) (2.2) (2.2)Dilutive impact of junior convertible securities shares 0.1 — —Average shares outstanding (adjusted diluted) 55.1 54.8 56.4Economic earnings per share $12.47 $12.84 $14.60__________________________28Table of Contents(1) See note (3) to the table in “Adjusted EBITDA (controlling interest).”(2) For the year ended December 31, 2017, we recorded an impairment of one of our Affiliates accounted for under the equity method, which reducedintangible-related deferred taxes by $35.7 million.(3) Other economic items include gains and expenses from adjustments to our contingent payment obligations. See note (1) to the table in “AdjustedEBITDA (controlling interest).”(4) During 2015, 2016 and 2017, Other economic items were net of income tax expense of $15.2 million, $1.5 million and $5.8 million, respectively.(5) See note (2) to the table in “Adjusted EBITDA (controlling interest).”Liquidity and Capital ResourcesIn 2017, we met our cash requirements primarily through cash generated by operating activities. Our principal uses of cash during the year were, and forthe foreseeable future are expected to be, for repayments of senior debt, distributions to Affiliate equity holders, repurchases of common stock, Affiliateequity repurchases, the payment of cash dividends on our common stock and general working capital purposes. We also expect that a principal use of cashwill be investments in new and existing Affiliates. We anticipate that cash flows from operations, together with borrowings under our revolver and proceedsfrom our equity distribution program, will be sufficient to support our cash flow needs for the foreseeable future.Cash and cash equivalents were $439.5 million and $430.8 million at December 31, 2017 and 2016, respectively. The following table summarizes ouroperating, investing and financing cash flow activities: For the Years Ended December 31,(in millions) 2015 2016 2017Operating cash flow $1,213.2 $1,050.3 $1,170.4Investing cash flow (324.5) (1,332.2) 13.8Financing cash flow (857.7) 200.9 (1,189.7)Operating Cash FlowIn 2017, operating cash flows were $1.2 billion, of which approximately 70% was attributable to the controlling interest. Operating cash flows increased$120.1 million, of which approximately 90% of the total change was attributable to the controlling interest, primarily from cash distributions of our share ofequity method earnings.In 2016, operating cash flows were $1.1 billion, of which approximately 70% was attributable to the controlling interest. Operating cash flows decreased$162.9 million, of which approximately 50% of the total change was attributable to the controlling interest, primarily due to a timing difference betweencash distributions received by the controlling interest of our share of equity method earnings and the recording of such earnings in our ConsolidatedStatements of Income. In 2016, the net effect of these timing differences decreased cash flows to the controlling interest $64.5 million. Investing Cash FlowInvesting cash flows increased $1.3 billion in 2017, primarily due to a decrease in cash used to make investments in Affiliates, which was attributable tothe controlling interest.Investing cash flows decreased $1.0 billion in 2016, primarily due to a $1.1 billion increase in cash used to make investments in Affiliates, which wasattributable to the controlling interest.Financing Cash FlowFinancing cash flows decreased $1.4 billion in 2017. This decrease was primarily due to a $485.0 million change in senior debt activity (from netborrowings of $225.0 million in 2016 to net repayments of $260.0 million in 2017), a decrease in proceeds from the issuance of common stock of $423.9million and an increase in the repurchase of our common stock of $359.8 million, all of which were attributable to the controlling interest.29Table of ContentsFinancing cash flows increased $1.1 billion in 2016. This increase was primarily a result of a $408.0 million increase in the issuance of our commonstock, a $380.3 million decrease in repurchases of our common stock and a $227.7 million increase in net borrowings of senior debt, all of which wereattributable to the controlling interest. We used available cash, proceeds from the issuance of our common stock and borrowings under our credit facilities tofinance our investments in new Affiliates in 2016.Senior Debt and Convertible SecuritiesThe following table summarizes the carrying value of our outstanding indebtedness: December 31,(in millions) 2015 2016 2017Senior bank debt $645.0 $870.0 $810.0Senior notes 944.6 945.1 745.7Convertible securities 305.2 307.5 309.9Senior Bank DebtWe have a senior unsecured multicurrency revolving $1.45 billion credit facility (the “revolver”) and a senior unsecured $385.0 million term loanfacility (the “term loan” and, together with the revolver, the “credit facilities”). The credit facilities mature on September 30, 2020.Subject to certain conditions, we may further increase the commitments under the revolver by up to $350.0 million and borrow up to an additional $65.0million under the term loan. We pay interest on any outstanding obligations under the revolver and on the term loan at specified rates, based either on theLIBOR rate or the prime rate as in effect from time to time.Under the terms of our credit facilities we are required to meet two financial ratio covenants. The first of these covenants is a maximum ratio of debt toEBITDA (the “bank leverage ratio”) of 3.25x. The second covenant is a minimum EBITDA to cash interest expense ratio of 3.00x (the “bank interestcoverage ratio”). For purposes of calculating these ratios, share-based compensation and Affiliate equity expense are added back to EBITDA. As of December31, 2017, our bank leverage and bank interest coverage ratios were 1.3x and 14.5x, respectively, and we were in compliance with all terms of our creditfacilities. As of December 31, 2017, we had approximately $1 billion of remaining capacity under our revolver, and could borrow all such capacity andremain in compliance with our credit facilities.Our ability to draw funding from the debt and capital markets globally is a significant source of liquidity for us, and our credit ratings, among otherfactors, allow us to access these sources of funding on favorable terms. We are currently rated A3 by Moody’s Investors Service and A- by S&P GlobalRatings.Senior NotesIn 2017, we redeemed, canceled and retired all $200.0 million principal amount outstanding of our 6.375% senior unsecured notes due 2042 at aredemption price equal to 100% of the principal amount. At December 31, 2017, we had two senior notes outstanding, and their respective principal terms aresummarized below. 2024SeniorNotes 2025SeniorNotesIssue date February 2014 February 2015Maturity date February 2024 August 2025Potential call date(1) Any Time Any TimePar value (in millions) $400.0 $350.0Call price(1) As Defined As Defined Stated coupon 4.25% 3.50%Coupon frequency Semi-annually Semi-annually__________________________(1) The senior notes may be redeemed at any time, in whole or in part, at a make-whole redemption price plus accrued and unpaid interest.30Table of ContentsConvertible SecuritiesAt December 31, 2017, we had junior convertible trust preferred securities outstanding (the “junior convertible securities”) with a carrying value of$309.9 million. The carrying value is accreted to the principal amount at maturity ($430.8 million) over a remaining life of approximately 20 years. Thejunior convertible securities bear interest at 5.15% per annum, payable quarterly in cash. Each $50 security is convertible, at any time, into 0.25 shares of ourcommon stock, which represents a conversion price of $200 per share, subject to customary anti-dilution adjustments. Holders of the junior convertiblesecurities have no rights to put these securities to us. Upon conversion, holders will receive cash or shares of our common stock, or a combination thereof, atour election. We may redeem the junior convertible securities if the closing price of our common stock exceeds $260 per share for 20 trading days in a periodof 30 consecutive trading days. The junior convertible securities are considered contingent payment debt instruments under federal income tax regulations,which require us to deduct interest in an amount greater than our reported interest expense. These deductions result in annual deferred tax liabilities of $7.2million. These deferred tax liabilities will be reclassified directly to stockholders’ equity if our common stock is trading above certain thresholds at the timeof the conversion of the securities.Equity Distribution ProgramWe have equity distribution and forward equity agreements with several major securities firms under which we, from time to time, may issue and sellshares of our common stock (immediately or on a forward basis) having an aggregate sales price of up to $500.0 million (the “equity distribution program”).As of December 31, 2017, no sales have occurred under the equity distribution program.Affiliate EquityMany of our consolidated Affiliate agreements provide us with a conditional right to call and Affiliate equity holders with the conditional right to puttheir Affiliate equity interests to us at certain intervals. For equity method Affiliates, we do not typically have such put and call arrangements. The purchaseprice of these conditional purchases is generally calculated based upon a multiple of the Affiliate’s cash flow distributions, which is intended to represent fairvalue. Affiliate equity holders are also permitted to sell their equity interests to other individuals or entities in certain cases, subject to our approval or otherrestrictions.As of December 31, 2017, our current redemption value of $811.9 million for these interests has been presented as Redeemable non-controlling interests.Although the timing and amounts of these purchases are difficult to predict, we paid $174.7 million for repurchases and collected $9.0 million for issuancesof Affiliate equity during 2017. We expect to pay approximately $125 million for repurchases in 2018. In the event of a repurchase, we become the owner ofthe cash flow associated with the repurchased equity.CommitmentsWe have committed to co-invest in certain Affiliate sponsored investment products. As of December 31, 2017, these unfunded commitments were $98.8million and may be called in future periods.As of December 31, 2017, we were contingently liable, upon achievement by certain Affiliates of specified financial targets, to make payments through2019 related to our investments in these Affiliates. For our consolidated Affiliates, we were contingently liable for up to $18.2 million in payments, andexpected to make payments of $10.2 million ($8.2 million in 2018). The present value of these expected payments was $9.4 million. For our equity methodAffiliates, we were contingently liable to make payments up to $170.0 million through 2018, and expected to make no payments.In addition, in connection with an investment in an Affiliate accounted for under the equity method, we entered into an arrangement with a minorityowner of the Affiliate that gives such owner the right to sell a portion of its ownership interest in the Affiliate to us annually beginning in the fourth quarter of2018. The purchase price of these conditional purchases will be at fair market value on the date of the transaction.We and certain of our Affiliates operate under regulatory authorities that require the maintenance of minimum financial or capital requirements.Share RepurchasesOur Board of Directors authorized share repurchase programs in January 2018, January 2017 and May 2015, authorizing us to repurchase up to 3.4million, 1.9 million and 3.0 million shares of our common stock, respectively, and these31Table of Contentsauthorizations have no expiry. Purchases may be made from time to time, at management’s discretion, in the open market or in privately negotiatedtransactions, including through the use of derivatives and accelerated share repurchase programs. As of December 31, 2017, we had repurchased all of theshares of the May 2015 authorized amount. As of the January 2018 authorization, there were a total of 5.0 million shares remaining available for repurchaseunder the January 2018 and January 2017 programs.Changes in U.S. Tax LawsOn December 22, 2017, changes in U.S. tax laws were enacted, which significantly revised U.S. corporate income tax by, among other things, loweringcorporate income tax rates, implementing a modified territorial tax system and imposing a one-time transition tax on deemed repatriated foreign earnings andprofits. For the year ended December 31, 2017, we reported a provisional one-time net benefit of $194.1 million from the changes in U.S. tax laws, primarilydue to the re-measurement of our deferred tax assets and liabilities, principally deferred tax liabilities associated with our intangible assets and convertiblesecurities, partially offset by a transition tax on deemed repatriated foreign earnings and profits. The re-measurement of our deferred tax assets and liabilitieswas primarily a non-cash item, and the transition tax was not significant and is payable over an eight year period. We do not expect the transition tax to haveany significant impact on our liquidity or capital resources. We expect the changes in U.S. tax laws to result in an ongoing net benefit to our earnings andcash flows due to lower U.S. tax rates. The impact of the changes in U.S. tax laws may be refined as further guidance, interpretations or information becomeavailable or from further evaluation of the impact of the changes in U.S. tax laws. See Note 22 of the Consolidated Financial Statements for additionalinformation.Contractual ObligationsThe following table summarizes our contractual obligations as of December 31, 2017. Contractual debt obligations include the cash payment of fixedinterest. Payments Due(in millions) Total 2018 2019-2020 2021-2022 ThereafterContractual Obligations(1) Senior bank debt $810.0 $— $810.0 $— $—Senior notes 958.5 29.2 58.5 58.5 812.3Junior convertible securities 874.6 22.2 44.4 44.4 763.6Leases(2) 256.7 37.4 69.2 60.2 89.9Affiliate equity 49.2 49.2 — — —Transition tax on foreign earnings 22.8 4.5 3.5 5.0 9.8Total contractual obligations $2,971.8 $142.5 $985.6 $168.1 $1,675.6Contingent Obligations Contingent payment obligations(3) $10.2 $8.2 $2.0 $— $—__________________________(1) This table does not include liabilities for commitments to co-invest in certain investment partnerships or uncertain tax positions of $98.8 million and$32.4 million, respectively, as we cannot predict when such obligations will be paid.(2) The controlling interest portion is $12.2 million through 2018, $21.9 million in 2019-2020, $18.0 million in 2021-2022 and $21.1 million thereafter.(3) The contingent payment obligations disclosed in the table represent the expected settlement amounts associated with our investments in new Affiliates.The maximum settlement amount through 2018 is $176.2 million, $12.0 million in 2019-2020 and none thereafter.Recent Accounting DevelopmentsSee Note 1 of the Consolidated Financial Statements.Critical Accounting Estimates and Judgments32Table of ContentsThe preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions and estimates thataffect the amounts reported in the Consolidated Financial Statements and accompanying notes. See Note 1 of the Consolidated Financial Statements for adiscussion of our significant accounting policies.The following are our critical accounting estimates and judgments used in the preparation of the Consolidated Financial Statements, and due to theirnature, actual results could differ materially from the amounts reported.Fair Value MeasurementsAccounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or mostadvantageous market in an orderly transaction between market participants at the measurement date. These standards establish a fair value hierarchy thatgives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.We make judgments to determine the fair value of certain assets, liabilities and equity interests when allocating the purchase price of our newinvestments, when revaluing our contingent payment arrangements, when we issue or repurchase Affiliate equity interests and when we test our intangibleassets or equity and cost method investments for impairment.In determining fair values for which market prices or quotations are not readily available, we typically use valuation techniques, including discountedcash flow analyses, where we make assumptions about growth rates of assets under management, profitability and useful lives of existing and prospectiveclient accounts. In these analyses, we also consider historical and current market multiples, tax benefits, credit risk, interest rates, tax rates and discount rates.We consider the reasonableness of our assumptions by comparing our valuation conclusions to observed market transactions and, in certain instances,consulting with third-party valuation firms.GoodwillGoodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified andseparately recognized. Our goodwill impairment assessments are performed annually (as of September 30th) at the reporting unit level which, in our case, isalso our single global asset management operating segment, or more frequently should circumstances suggest fair value has declined below the relatedcarrying value. If we determine that the fair value has declined below our related carrying value, an impairment is recognized to reduce the carrying value toits fair value. We completed our annual goodwill impairment assessment and no impairments were identified. For purposes of our assessment, we consideredvarious qualitative factors (including market multiples for asset management businesses) and determined that it was more-likely-than-not that the fair valueof our reporting unit was greater than its respective carrying amount, including goodwill.Indefinite-Lived Intangible AssetsIndefinite-lived intangible assets include investment advisory contracts between our Affiliates and their mutual funds and other retail-orientedinvestment products. Because the contracts are with the investment products themselves, and not with the underlying investors, and the contracts betweenour Affiliates and the investment products are typically renewed on an annual basis, industry practice under GAAP is to consider the contract life to beindefinite and, as a result, not amortizable.We perform indefinite-lived intangible asset impairment tests annually, or more frequently should circumstances suggest fair value has declined belowthe related carrying value. If we determine that the fair value has declined below our related carrying value, an impairment is recognized to reduce thecarrying value to its fair value. We completed our annual impairment assessment and no impairments were identified. For purposes of our assessment, weconsidered various qualitative factors (including market multiples) and determined that it was more-likely-than-not that the fair value of each asset wasgreater than its carrying amount.Definite-Lived Intangible AssetsDefinite-lived intangible assets include investment advisory contracts between our Affiliates and their underlying investors, and are amortized over theirexpected period of economic benefit. We monitor the expected period of economic benefit of these assets and revise it, if necessary. We review historical andprojected attrition rates and other events that may influence our projections of the future period of economic benefit that we will derive from theserelationships. Significant judgment is required to estimate the period that these assets will contribute to our cash flows and the pattern over which these assetswill be consumed.We perform definite-lived intangible asset impairment tests annually, or more frequently should circumstances suggest fair value has declined below therelated carrying value. If we determine that the fair value has declined below our related carrying value, an impairment is recognized to reduce the carryingvalue to its fair value. We assess each of our definite-lived acquired33Table of Contentsclient relationships for impairment by comparing their carrying value to the projected undiscounted cash flows of the acquired client relationships. Wecompleted our annual assessment and noted that projected undiscounted cash flows over the remaining life of each of these assets exceed their carrying valueand, accordingly, no impairments were identified.Equity and Cost Method InvestmentsWe evaluate equity and cost method investments for impairment by assessing whether the fair value of the investment has declined below its carryingvalue for a period we consider other-than-temporary. If we determine that a decline in fair value below our carrying value is other-than-temporary, animpairment is recognized to reduce the carrying value of the investment to its fair value.During 2017, we determined that the fair value of an Equity method investment had declined below its carrying value. The decline in the fair value ofthis investment was the result of a cumulative decline in assets under management, coupled with the recent loss of a significant client, which has decreasedthe forecasted revenue of the firm. The fair value was determined using a discounted cash flow analysis. The significant assumptions used in the cash flowanalysis include a projected growth rate of 10.0%, discount rates of 14.0% and 25.0% for asset and performance based fees, respectively, and a marketparticipant tax rate of 25.0%. We considered the decline in fair value to be other-than-temporary and, accordingly, we recognized an impairment of $93.1million. For our remaining equity and cost method investments, we completed our annual evaluation and no impairments were identified.Income TaxesOur income tax expense, deferred tax assets and liabilities and liabilities for unrecognized tax benefits reflect management’s best estimate of current andfuture taxes to be paid. We are subject to income taxes in the U.S. and certain foreign jurisdictions.Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financialstatements, which will result in taxable or deductible amounts in the future. We measure our deferred taxes based on enacted tax rates and projected stateapportionment percentages for the years in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in taxrates is recognized in income tax expense in the period in which the change in tax rates is enacted.Our principal deferred tax assets relate to deferred compensation, state and foreign operating loss carryforwards and the indirect benefits of uncertainforeign tax positions. We regularly assess the recoverability of our deferred tax assets, considering all available positive and negative evidence, includingfuture reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. Avaluation allowance is recorded to reduce the carrying values of deferred tax assets to the amount that is more-likely-than-not to be realized.We record unrecognized tax benefits based on whether it is more-likely-than-not that uncertain tax positions will be sustained on the basis of thetechnical merits of the position. If it is determined an uncertain tax position is more-likely-than-not to be sustained, the Company recognizes the largestamount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.Share-Based Compensation and Affiliate EquityWe have share-based compensation arrangements covering directors, senior management and employees (including our Affiliates). We calculate share-based compensation using the fair value of the awards on the grant date. Our share-based compensation arrangements typically vest and become fullyexercisable over three to five years of continued employment and, in some cases, are further subject to certain performance or market conditions. Werecognize expense net of expected forfeitures on a straight-line basis over the requisite service period, including grants that are subject to graded vesting.We estimate the fair value of stock option awards using the Black-Scholes option pricing model. The Black-Scholes model requires us to makeassumptions about the volatility and dividend yield of our common stock and the expected life of our stock options. In measuring expected volatility, weconsider both the historical volatility of our common stock, as well as the current implied volatility from traded options.For restricted stock awards with service or performance conditions, we determine the fair value of the awards using our share price on the date of grantand the number of awards that are expected to be delivered. For awards with market conditions, the fair value of the award is determined using a Monte Carlosimulation with inputs for expected volatility, a risk-free rate and expected dividends. Our estimate of expected volatility is developed in a manner consistentwith that of our stock options.From time to time, we grant equity interests in our Affiliates to Affiliate management and our officers, with vesting, forfeiture and repurchase termsestablished at the date of grant. The fair value of the equity interests is determined as of the date34Table of Contentsof grant using a discounted cash flow analysis. Key valuation assumptions include projected assets under management, fee rates, tax rates and discount rates.Redeemable non-controlling interests represent the currently redeemable value of Affiliate equity interests. We may pay for these Affiliate equitypurchases in cash, shares of our common stock or other forms of consideration, at our election.We generally value these interests upon their transfer or repurchase by applying market multiples to cash flows, which is intended to represent fair value.The use of different assumptions could change the value of these interests, including the amount of compensation expense, if any, that we may report upontheir transfer or repurchase.Item 7A.Quantitative and Qualitative Disclosures About Market RiskAssets Under Management Market Price RiskOur Revenue and equity method revenue are derived primarily from asset based fees that are typically determined as a percentage of the value of aclient’s assets under management and performance fees determined as a percentage of the returns realized on a client’s assets under management. Such valuesare affected by changes in financial markets (including interest rates and foreign exchange rates) and, accordingly, declines in the financial markets maynegatively impact our Revenue and equity method revenue.As of December 31, 2017, we estimate a proportional 1% increase or decrease in the value of our assets under management would have resulted in anannualized increase or decrease in asset based fees in Revenue of $22.0 million for our consolidated Affiliates and in equity method revenue of $22.7 millionfor our equity method Affiliates. This proportional increase or decrease excludes assets under management on which asset based fees are charged oncommitted capital.Interest Rate RiskWe have fixed rates of interest on our senior notes and on our junior convertible securities. While a change in market interest rates would not affect theinterest expense incurred on our fixed rate securities, such a change may affect the fair value of these securities. We estimate that a 1% change in interest rateswould have resulted in a net change in the fair value of our fixed rate securities of $63.2 million, as of December 31, 2017. We pay a variable rate of intereston our credit facilities. We estimate that a 1% increase in interest rates would have increased the interest expense related to the outstanding balance under ourcredit facilities by $8.1 million, as of December 31, 2017.Foreign Currency Exchange RiskThe functional currency of most of our Affiliates is U.S. dollars. Certain of our Affiliates have a foreign currency as their functional currency, primarilypound sterling or Canadian dollars, and are impacted by movements in foreign exchange rates. In addition, the valuations of our foreign Affiliates with a non-U.S. dollar functional currency are impacted by fluctuations in foreign exchange rates, which are recorded as a component of stockholders’ equity. Toillustrate the effect of possible changes in foreign exchange rates, we estimate a 1% change in the pound sterling and Canadian dollar to U.S. dollar exchangerates would have resulted in changes to stockholders’ equity of approximately $13 million and $2 million, respectively, as of December 31, 2017, and annualchanges to Income before income taxes of $1.2 million and $0.3 million, respectively.Derivative RiskFrom time to time, we seek to offset our exposure to interest rate and market changes, and our Affiliates seek to offset exposure to foreign currencyexchange rates, by entering into derivative contracts. There can be no assurance that our or our Affiliates’ hedging contracts will meet their overall objectiveor that we or our Affiliates will be successful in obtaining hedging contracts in the future.Item 8.Financial Statements and Supplementary DataManagement’s Report on Internal Control Over Financial ReportingManagement of Affiliated Managers Group, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control overfinancial reporting. The Company’s internal control over financial reporting processes are designed by, or under the supervision of, the Company’s chiefexecutive and chief financial officers and applied by the Company’s Board of Directors, management and other senior employees to provide reasonableassurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes inaccordance with accounting principles generally accepted in the U.S.35Table of ContentsThe Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonabledetail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permitpreparation of financial statements in accordance with accounting principles generally accepted in the U.S., and that receipts and expenditures are beingmade only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on our financial statements.As of December 31, 2017, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based onthe framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31,2017 was effective.The Company’s internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers LLP, an independentregistered public accounting firm, as stated in their report appearing in “Report of Independent Registered Public Accounting Firm,” which expresses anunqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017.36Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Affiliated Managers Group, Inc.:Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Affiliated Managers Group, Inc. and its subsidiaries as of December 31, 2017 andDecember 31, 2016, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three yearsin the period ended December 31, 2017, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2)(collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as ofDecember 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizationsof the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2017 and December 31, 2016, and the results of their operations and their cash flows for each of the three years in the period ended December31, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in allmaterial respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - IntegratedFramework (2013) issued by the COSO.Basis for OpinionsThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financialreporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report onInternal Control over Financial Reporting appearing under Item 8. Our responsibility is to express opinions on the Company’s consolidated financialstatements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the PublicCompany Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whethereffective internal control over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a testbasis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principlesused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit ofinternal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedperforming such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.37Table of ContentsBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPBoston, MassachusettsFebruary 23, 2018We have served as the Company’s auditor since 1993. 38Table of ContentsAFFILIATED MANAGERS GROUP, INC.CONSOLIDATED STATEMENTS OF INCOME(in millions, except per share data) For the Years Ended December 31, 2015 2016 2017Revenue $2,484.5 $2,194.6 $2,305.0 Operating expenses: Compensation and related expenses 1,027.7 932.4 979.0Selling, general and administrative 443.8 398.1 373.1Intangible amortization and impairments 115.4 110.2 86.4Depreciation and other amortization 18.8 19.5 20.3Other operating expenses (net) 43.8 29.1 40.5Total operating expenses (net) 1,649.5 1,489.3 1,499.3 835.0 705.3 805.7Income from equity method investments 288.9 328.8 302.2Operating income 1,123.9 1,034.1 1,107.9 Non-operating (income) and expenses: Investment and other income (15.3) (33.8) (60.0)Interest expense 88.9 89.4 85.3Imputed interest expense and contingent payment arrangements (40.3) 3.9 15.5 33.3 59.5 40.8Income before income taxes 1,090.6 974.6 1,067.1 Income tax expense 263.4 235.6 58.4Net income 827.2 739.0 1,008.7 Net income (non-controlling interests) (317.7) (266.2) (319.2) Net income (controlling interest) $509.5 $472.8 $689.5 Average shares outstanding (basic) 54.3 54.2 56.0Average shares outstanding (diluted) 57.2 57.0 58.6 Earnings per share (basic) $9.37 $8.73 $12.30Earnings per share (diluted) $9.17 $8.57 $12.03Dividends per share $— $— $0.80The accompanying notes are an integral part of the Consolidated Financial Statements.39Table of ContentsAFFILIATED MANAGERS GROUP, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in millions) For the Years Ended December 31, 2015 2016 2017Net income $827.2 $739.0 $1,008.7Other comprehensive income (loss): Foreign currency translation gain (loss) (93.2) (115.3) 128.0Change in net realized and unrealized gain (loss) on derivative securities, net of tax 1.9 0.1 (0.8)Change in net unrealized gain (loss) on investment securities, net of tax 22.1 (35.2) (7.7)Other comprehensive income (loss) (69.2) (150.4) 119.5Comprehensive income 758.0 588.6 1,128.2Comprehensive income (non-controlling interests) (298.4) (220.6) (337.6)Comprehensive income (controlling interest) $459.6 $368.0 $790.6The accompanying notes are an integral part of the Consolidated Financial Statements.40Table of ContentsAFFILIATED MANAGERS GROUP, INC.CONSOLIDATED BALANCE SHEETS(in millions, except par value) December 31, 2016 2017Assets Cash and cash equivalents $430.8 $439.5Receivables 383.3 433.8Investments in marketable securities 122.4 77.8Other investments 147.5 165.0Fixed assets (net) 110.1 111.0Goodwill 2,628.1 2,662.5Acquired client relationships (net) 1,497.4 1,449.7Equity method investments in Affiliates 3,368.3 3,304.7Other assets 61.2 58.1Total assets $8,749.1 $8,702.1Liabilities and Equity Payables and accrued liabilities $729.3 $807.2Senior bank debt 868.6 809.0Senior notes 939.4 741.3Convertible securities 301.6 304.4Deferred income tax liability (net) 660.8 467.4Other liabilities 149.4 182.4Total liabilities 3,649.1 3,311.7Commitments and contingencies (Note 10) Redeemable non-controlling interests 673.5 811.9Equity: Common stock ($0.01 par value, 153.0 shares authorized; 58.5 shares outstanding in 2016 and 2017) 0.6 0.6Additional paid-in capital 1,073.5 808.6Accumulated other comprehensive loss (122.9) (21.8)Retained earnings 3,054.4 3,698.5 4,005.6 4,485.9Less: Treasury stock, at cost (1.8 shares in 2016 and 3.4 shares in 2017) (386.0) (663.7)Total stockholders’ equity 3,619.6 3,822.2Non-controlling interests 806.9 756.3Total equity 4,426.5 4,578.5Total liabilities and equity $8,749.1 $8,702.1The accompanying notes are an integral part of the Consolidated Financial Statements.41Table of ContentsAFFILIATED MANAGERS GROUP, INC.CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(in millions) Total Stockholders’ Equity SharesOutstanding CommonStock AdditionalPaid-InCapital AccumulatedOtherComprehensiveIncome (Loss) RetainedEarnings TreasuryStock atCost Non-controllingInterests TotalEquityDecember 31, 201455.8 $0.6 $763.4 $31.8 $2,072.1 $(240.9) $1,016.2 $3,643.2Net income— — — — 509.5 — 317.7 827.2Other comprehensive income (loss)— — — (49.9) — — (19.3) (69.2)Share-based compensation— — 34.2 — — — — 34.2Common stock issued under share-based incentiveplans— — (131.0) — — 185.0 — 54.0Tax benefit from share-based incentive plans— — 44.5 — — — — 44.5Shares repurchases— — — — — (366.0) — (366.0)Investments in Affiliates— — — — — — 33.8 33.8Affiliate equity activity: Affiliate equity expense— — 16.9 — — — 51.6 68.5Issuances— — 0.1 — — — 1.6 1.7Repurchases— — 48.4 — — — (0.4) 48.0Changes in Redemption value of Redeemablenon-controlling interests— — (81.6) — — — — (81.6)Transfers to Redeemable non-controllinginterests— — — — — — (49.5) (49.5)Capital Contributions by Affiliate equity holders— — — — — — 11.7 11.7Distributions to non-controlling interests— — — — — — (431.4) (431.4)December 31, 201555.8 $0.6 $694.9 $(18.1) $2,581.6 $(421.9) $932.0 $3,769.1Net income— — — — 472.8 — 266.2 739.0Other comprehensive income (loss)— — — (104.8) — — (45.6) (150.4)Share-based compensation— — 39.2 — — — — 39.2Common stock issued under share-based incentiveplans— — (53.8) — — 69.3 — 15.5Shares repurchases— — — — — (33.4) — (33.4)Forward equity— — 5.2 — — — — 5.2Common stock issued under forward equityagreement2.7 0.0 440.3 — — — — 440.3Issuance costs and other— — (3.0) — — — — (3.0)Affiliate equity activity: Affiliate equity expense— — 10.0 — — — 31.2 41.2Issuances— — (2.8) — — — 14.7 11.9Repurchases— — 14.9 — — — 0.4 15.3Changes in Redemption value of Redeemablenon-controlling interests— — (71.4) — — — — (71.4)Transfers to Redeemable non-controllinginterests— — — — — — (42.6) (42.6)Capital Contributions by Affiliate equity holders— — — — — — 4.7 4.7Distributions to non-controlling interests— — — — — — (354.1) (354.1)December 31, 201658.5 $0.6 $1,073.5 $(122.9) $3,054.4 $(386.0) $806.9 $4,426.5Net income— — — — 689.5 — 319.2 1,008.7Other comprehensive income (loss)— — — 101.1 — — 18.4 119.5Share-based compensation— — 40.4 — — — — 40.4Common stock issued under share-based incentiveplans— — (117.6) — — 138.6 — 21.0Shares repurchases— — — — — (416.3) — (416.3)42Table of ContentsDividends ($0.80 per share)— — — — (45.4) — — (45.4)Issuance costs and other— — 0.6 — — — — 0.6Affiliate equity activity: Affiliate equity expense— — 13.2 — — — 36.8 50.0Issuances— — (0.6) — — — 3.7 3.1Repurchases— — 40.6 — — — (6.0) 34.6Changes in redemption value of Redeemable non-controlling interests— — (241.5) — — — — (241.5)Transfers to Redeemable non-controlling interests— — — — — — (76.8) (76.8)Capital contributions by Affiliate equity holders— — — — — — 6.3 6.3Distributions to non-controlling interests— — — — — — (352.2) (352.2)December 31, 201758.5 $0.6 $808.6 $(21.8) $3,698.5 $(663.7) $756.3 $4,578.5The accompanying notes are an integral part of the Consolidated Financial Statements.43Table of ContentsAFFILIATED MANAGERS GROUP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions) For the Years Ended December 31, 2015 2016 2017Cash flow from (used in) operating activities: Net income $827.2 $739.0 $1,008.7Adjustments to reconcile Net income to net cash flow from operating activities: Intangible amortization and impairments 115.4 110.2 86.4Depreciation and other amortization 18.8 19.5 20.3Deferred income tax provision 101.2 59.3 (123.6)Income from equity method investments (288.9) (328.8) (302.2)Distributions received from equity method investments 346.1 346.4 429.8Share-based compensation and Affiliate equity expense 102.7 80.4 90.4Other non-cash items (38.0) (16.1) (26.3)Changes in assets and liabilities: Purchases of trading securities by Affiliate sponsored consolidated products (4.6) (86.2) (34.1)Sales of trading securities by Affiliate sponsored consolidated products 4.1 82.8 29.9(Increase) decrease in receivables 54.5 29.6 (53.5)(Increase) decrease in other assets 6.7 (6.1) (7.7)Increase (decrease) in payables, accrued liabilities and other liabilities (32.0) 20.3 52.3Cash flow from operating activities 1,213.2 1,050.3 1,170.4Cash flow from (used in) investing activities: Investments in Affiliates (297.7) (1,361.3) (30.6)Purchase of fixed assets (38.2) (20.2) (18.5)Purchase of investment securities (13.5) (16.0) (37.2)Sale of investment securities 24.9 65.3 100.1Cash flow from (used in) investing activities (324.5) (1,332.2) 13.8Cash flow from (used in) financing activities: Borrowings of senior bank debt and senior notes 1,253.3 1,350.0 545.0Repayments of senior debt, senior notes and convertible securities (1,256.0) (1,125.0) (805.0)Issuance of common stock 57.8 465.8 41.9Dividends paid on common stock — — (44.9)Repurchase of common stock (413.7) (33.4) (393.2)Distributions to non-controlling interests (431.4) (354.1) (352.2)Affiliate equity issuances and repurchases (120.6) (104.0) (165.7)Excess tax benefit from share-based compensation 44.5 — —Settlement of forward equity sale agreement 0.1 — 5.2Other financing items 8.3 1.6 (20.8)Cash flow from (used in) financing activities (857.7) 200.9 (1,189.7)Effect of foreign exchange rate changes on cash and cash equivalents (17.8) (49.9) 14.2Net increase (decrease) in cash and cash equivalents 13.2 (130.9) 8.7Cash and cash equivalents at beginning of period 550.6 563.8 430.8Net cash outflows upon the consolidation and deconsolidation of Affiliate sponsored products — (2.1) —Cash and cash equivalents at end of period $563.8 $430.8 $439.5Supplemental disclosure of cash flow information: Interest paid $76.4 $85.0 $82.1Income taxes paid 89.6 152.3 165.0Supplemental disclosure of non-cash financing activities: Stock issued under incentive plans 10.7 17.2 59.3Stock received for tax withholdings on share-based payments 3.6 9.8 20.0Payables recorded for Share repurchases — — 23.1Payables recorded for Affiliate equity repurchases 62.3 12.1 47.3Stock received for the exercise of stock options — 11.2 30.2The accompanying notes are an integral part of the Consolidated Financial Statements.44Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.Business and Summary of Significant Accounting Policies(a)Organization and Nature of OperationsAffiliated Managers Group, Inc. (“AMG” or the “Company”) is a global asset management company with equity investments in leading boutiqueinvestment management firms, referred to as “Affiliates.” AMG’s Affiliates provide active return-oriented strategies to assist institutional, retail and high networth clients worldwide in achieving their investment objectives.Each of AMG’s Affiliates operates through distinct entities, typically organized as limited liability companies or limited partnerships (or equivalent non-U.S. forms), which affords AMG the flexibility to design a separate operating agreement for each Affiliate. Each operating agreement reflects the specificterms of AMG’s economic participation in the Affiliate through a “structured partnership interest.” AMG’s structured partnership interests consist ofarrangements through which AMG shares in the Affiliate’s revenue without regard to expenses and arrangements through which AMG shares in the Affiliate’srevenue less certain agreed-upon expenses. When AMG owns a controlling interest in an Affiliate, its structured partnership interest is typically calculated byreference to the Affiliate’s revenue without regard to expenses and a set percentage of revenue is allocated to fund operating expenses, includingcompensation (the “Operating Allocation”), while the remaining revenue (the “Owners’ Allocation”) is allocated to AMG and Affiliate management equityowners in proportion to their respective ownership interests. When AMG does not own a controlling interest in an Affiliate, but has significant influence,AMG accounts for its interest in the Affiliate under the equity method. For these Affiliates, AMG uses structured partnership interests in which its share of theAffiliate’s earnings or losses is contractually calculated, allocated and distributed using a formula whereby its share is based on a percentage of the Affiliate’srevenue less certain agreed-upon expenses. This type of partnership interest allows AMG to benefit from any increase in revenue or any decrease in theexpenses that are included in the calculation, but also directly exposes it to any decrease in revenue or any increase in such expenses. AMG also usesstructured partnership interests in which its share of the Affiliate’s earnings or losses is contractually calculated, allocated and distributed using a formulawhereby its share is based on a percentage of the Affiliate’s revenue without regard to expenses. In this type of partnership interest, AMG’s contractual shareof revenue generally has priority over distributions to Affiliate management.(b)Basis of Presentation and Use of EstimatesThe financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All dollar amounts, except pershare data in the text and tables herein, are stated in millions unless otherwise indicated. All material intercompany balances and transactions have beeneliminated. In 2017, the Company changed its Consolidated Statement of Income presentation to include Income from equity method investments inOperating income, as its equity method Affiliates are integral to the Company’s operations. This change, along with other reclassifications, has been made tothe prior period’s financial statements to conform to the current period’s presentation. The preparation of financial statements in conformity with GAAPrequires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results coulddiffer from those estimates.(c)Principles of ConsolidationIn evaluating whether an investment must be consolidated, the Company evaluates the risk, rewards, and significant terms of each of its Affiliate andother investments to determine if an investment is considered a voting rights entity (“VRE”) or a variable interest entity (“VIE”). An entity is a VRE when thetotal equity investment at risk is sufficient to enable the entity to finance its activities independently and when the equity holders have the obligation toabsorb losses, the right to receive residual returns and the right to direct the activities of the entity that most significantly impact its economic performance.An entity is a VIE when it lacks one or more of the characteristics of a VRE, which for the Company are Affiliates structured as partnerships (or similarentities) where the limited partners lack substantive kick-out or substantive participation rights over the general partner. Assessing whether an entity is a VREor VIE involves judgment. Upon the occurrence of certain events, management reviews and reconsiders its previous conclusion regarding the status of anentity as a VRE or a VIE.The Company consolidates VREs when it has control over significant operating, financial and investing decisions of the investment. When theCompany lacks control, but is deemed to have significant influence, the Company accounts for the investment under the equity method. Other investments inwhich the Company does not have rights to exercise significant influence are accounted for under the cost method. Under the cost method, income isrecognized when dividends are declared.45Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company consolidates VIEs when it is the primary beneficiary of the entity, which is defined as having the power to direct the activities that mostsignificantly impact the VIE’s economic performance and the obligation to absorb losses of or the right to receive benefits from the entity that couldpotentially be significant to the VIE. The Company applies the equity method of accounting to VIEs where the Company is not the primary beneficiary buthas the ability to exercise significant influence over operating and financial matters of the VIE.Investments in AffiliatesSubstantially all of the Company’s Affiliates are considered VIEs and are either consolidated or accounted for under the equity method. A limitednumber of the Company’s Affiliates are considered VREs and most of these are accounted for under the equity method.When an Affiliate is consolidated, the portion of the Affiliate’s management equity owners’ earnings attributable to Owners’ Allocation is included inNet income (non-controlling interests) in the Consolidated Statements of Income. Undistributed Operating and Owners’ Allocation attributable to Affiliatemanagement equity owners, along with their share of any tangible or intangible net assets, are presented within Non-controlling interests on the ConsolidatedBalance Sheets. Affiliate equity interests where the holder has certain rights to demand settlement are presented, at their current redemption values, asRedeemable non-controlling interests on the Consolidated Balance Sheets. The Company periodically issues, sells and repurchases the Affiliate equity of itsconsolidated Affiliates. Because these transactions take place between entities under common control, any gains or losses attributable to these transactionsare required to be included within Additional Paid-in Capital, net of any related income tax effects in the period of the change.When an Affiliate is accounted for under the equity method, the Company’s share of an Affiliate’s earnings or losses, net of amortization andimpairments, is included in Income from equity method investments in the Consolidated Statements of Income and the Company’s interest in the Affiliate isreported in Equity method investments in Affiliates in the Consolidated Balance Sheets. The Company’s share of income taxes incurred directly by Affiliatesaccounted for under the equity method is recorded within Income tax expense in the Consolidated Statements of Income.The Company periodically evaluates its equity method investments for impairment. In such impairment evaluations, the Company assesses whether ornot the fair value of the investment has declined below its carrying value for a period considered to be other-than-temporary. If the Company determines thata decline in fair value below the carrying value of the investment is other-than-temporary, then the carrying value of the investment is reduced to its fairvalue and this reduction would be recorded in Income from equity method investments.Affiliate Sponsored Investment VehiclesThe Company’s Affiliates sponsor various investment products where they also act as the investment advisor. These investment products are typicallyowned primarily by third-party investors; however, certain products are funded with general partner and seed capital investments from the Company and itsconsolidated Affiliates.Investors are generally entitled to substantially all of the economics of these products, except for the management and performance fees earned byconsolidated Affiliates or any gains or losses attributable to the Company or its consolidated Affiliates’ investments in these products. As a result, theCompany does not generally consolidate these products unless the Company and/or the Affiliate’s interest in the product is considered substantial. Whenconsolidating these products, the Company retains the specialized investment company accounting principles of the underlying products, and all of theunderlying investments are carried at fair value in Investments in marketable securities in the Consolidated Balance Sheets with corresponding changes inthe investments’ fair values reflected in Other operating expenses (net) in the Consolidated Statements of Income. Purchases and sales of securities arepresented within purchases and sales by Affiliate sponsored consolidated products in the Consolidated Statements of Cash Flows. When Affiliates no longercontrol these products, due to a reduction in ownership or other reasons, the products are deconsolidated.(d)Cash and Cash EquivalentsThe Company considers all highly liquid investments, including money market mutual funds, with original maturities of three months or less to be cashequivalents. Cash equivalents are stated at cost, which approximates market value due to the short-term maturity of these investments. Money market mutualfunds with a floating net asset value (“NAV”) would not meet the definition of a cash equivalent if the fund has enacted liquidity fees or redemption gates.(e)Receivables46Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company’s Affiliates earn asset and performance based fees, which are billed based on the terms of the related contracts. Billed but uncollected assetand performance based fees are presented within Receivables on the Consolidated Balance Sheets and are generally short-term in nature.Certain of the Company’s Affiliates in the UK act as intermediaries between clients and their sponsored investment products. Normal settlement periodson transactions initiated by these clients with the sponsored investment products result in unsettled fund share receivables and payables that are presented ona gross basis within Receivables and Payables and accrued liabilities on the Consolidated Balance Sheets. The gross presentation of these receivables andoffsetting payables reflects the legal relationship between the underlying investor and the Company’s Affiliates.(f)Investments in Marketable SecuritiesInvestments in marketable securities are classified as either trading or available-for-sale and carried at fair value. Unrealized gains or losses oninvestments classified as available-for-sale are reported, net of tax, as a separate component of Accumulated other comprehensive loss in Equity until realizedwhen they are reported in Investment and other income in the Consolidated Statements of Income. Realized and unrealized gains or losses related to tradingsecurities are reported within Investment and other income. Realized gains and losses are recorded on the trade date on a specific identified basis. If a declinein the fair value of an available-for-sale investment is determined to be other-than-temporary, the carrying amount of the asset is reduced to its fair value, andthe difference is charged to Investment and other income in the period incurred.(g)Fair Value MeasurementsThe Company determines the fair value of certain investment securities and other financial and non-financial assets and liabilities. Fair value isdetermined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date, utilizing a hierarchy of three different valuation techniques:Level 1 - Unadjusted quoted market prices for identical instruments in active markets;Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; andmodel-derived valuations whose inputs, or significant value drivers, are observable; andLevel 3 - Prices reflect the Company’s own assumptions concerning unobservable inputs to the valuation model. These inputs require significantmanagement judgment and reflect the Company’s assumptions that market participants would use in pricing the asset or liability.(h)Fixed AssetsFixed assets are recorded at cost and depreciated using the straight-line method over their estimated useful lives. The estimated useful lives of officeequipment and furniture and fixtures range from three to ten years. Computer software developed or obtained for internal use is amortized over the estimateduseful life of the software, generally three to seven years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term ofthe lease, and buildings are amortized over their expected useful lives. The costs of improvements that extend the life of a fixed asset are capitalized, whilethe cost of repairs and maintenance are expensed as incurred. Land and artwork are not depreciated; artwork is included in Land, improvements and other.(i)LeasesThe Company and its Affiliates currently lease office space and equipment under various leasing arrangements. As these leases expire, it can be expectedthat in the normal course of business they will be renewed or replaced. Leases are classified as either capital leases or operating leases, as appropriate. Mostlease agreements for office space that are classified as operating leases contain renewal options, rent escalation clauses or other inducements provided by thelandlord. Rent expense is accrued to recognize lease escalation provisions and inducements provided by the landlord, if any, on a straight-line basis over thelease term and is reported in Other operating expenses (net) on the Consolidated Statements of Income.(j)Acquired Client Relationships and GoodwillEach Affiliate in which the Company makes an investment has identifiable assets arising from contractual or other legal rights with their clients(“acquired client relationships”). In determining the value of acquired client relationships, the Company47Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)analyzes the net present value of these Affiliates’ existing client relationships based on a number of factors, including: the Affiliate’s historical and potentialfuture operating performance; the Affiliate’s historical and potential future rates of attrition of existing clients; the stability and longevity of existing clientrelationships; the Affiliate’s recent, as well as long-term, investment performance; the characteristics of the firm’s products and investment styles; the stabilityand depth of the Affiliate’s management team; and the Affiliate’s history and perceived franchise or brand value.The Company has determined that certain of its acquired client relationships meet the criteria to be considered indefinite-lived assets because theCompany expects the contracts to be renewed annually and, therefore, the cash flows generated by these contracts to continue indefinitely. Accordingly, theCompany does not amortize these intangible assets, but instead reviews these assets annually or more frequently whenever events or circumstances occurindicating that the recorded indefinite-lived assets may be impaired. Each reporting period, the Company assesses whether events or circumstances haveoccurred that indicate that the indefinite life criteria are no longer met. If the indefinite life criteria are no longer met, the Company would assess whether thecarrying value of the assets exceeds its fair value, an impairment loss would be recorded in an amount equal to any such excess and these assets would bereclassified to definite-lived.The expected period of economic benefit of definite-lived acquired client relationships are determined based on an analysis of the historical andprojected attrition rates of each Affiliate’s existing clients, and other factors that may influence the expected future economic benefit the Company willderive from the relationships. The expected lives of definite-lived acquired client relationships are analyzed annually or more frequently whenever events orcircumstances have occurred that indicate the expected period of economic benefit may no longer be appropriate.The Company tests for the possible impairment of indefinite and definite-lived intangible assets annually or more frequently whenever events or changesin circumstances indicate that the carrying amount of the asset is not recoverable. If such indicators exist, the Company compares the fair value of the asset tothe carrying value of the asset. If the carrying value is greater than the fair value, an impairment loss would be recorded in Intangible amortization andimpairments in the Consolidated Statements of Income.Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified andseparately recognized. Goodwill is not amortized, but is instead reviewed for impairment. The Company assesses goodwill for impairment at least annually,as of September 30th, or more frequently whenever events or circumstances occur indicating that the recorded goodwill may be impaired. If the carryingamount of goodwill exceeds the fair value, an impairment loss would be recorded in Intangible amortization and impairments.(k)Issuance CostsIssuance costs related to the Company’s senior bank debt are amortized over the remaining term of the senior unsecured multicurrency revolving creditfacility (the “revolver”) and the senior unsecured term loan facility (the “term loan” and, together with the revolver, the “credit facilities”), whichapproximates the effective interest method. Issuance costs associated with the revolver and term loan are included in Other assets and as a reduction of therelated debt balance, respectively, in the Consolidated Balance Sheets. Issuance costs associated with the Company’s senior notes are amortized over theshorter of the period to the first investor put date or the Company’s estimate of the expected term of the security, and are included as a reduction of the relateddebt balance in the Consolidated Balance Sheets. The expense resulting from the amortization of these issuance costs is reported in Interest expense in theConsolidated Statements of Income.(l)Derivative Financial InstrumentsFrom time to time, the Company may utilize financial instruments to offset its exposure to interest rates and market changes and the Company’sAffiliates may use foreign currency forward contracts to hedge the risk of foreign exchange rate movements.The Company records derivatives in the Consolidated Balance Sheets at fair value. If the Company’s derivatives qualify as cash flow hedges, theeffective portion of the unrealized gain or loss is recorded in Accumulated other comprehensive loss as a separate component of stockholders’ equity andreclassified to Investment and other income when the hedged cash flows are recorded in earnings. Hedge effectiveness is generally measured by comparingthe present value of the cumulative change in the expected future variable cash flows of the hedged contract with the present value of the cumulative changein the expected future variable cash flows of the hedged item. To the extent that the critical terms of the hedged item and the derivative are not identical,hedge ineffectiveness would be reported in Investment and other income. If the Company’s or its Affiliates’ derivatives do not qualify as cash flow or fairvalue hedges, changes in the fair value of the derivatives are recognized as a gain or loss in Investment and other income.48Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(m)Contingent Payment ArrangementsThe Company periodically enters into contingent payment arrangements in connection with its business combinations. In these arrangements, theCompany agrees to pay additional consideration to the sellers to the extent that certain specified financial targets are achieved. For consolidated Affiliates,the Company estimates the fair value of these potential future obligations at the time a business combination is consummated and records a liability in Otherliabilities on its Consolidated Balance Sheet. The Company then accretes the obligation to its expected payment amount over the period until thearrangement is measured. If the Company’s expected payment amount subsequently changes, the obligation is reduced or increased in the current periodresulting in a gain or loss, respectively. Both gains and losses resulting from changes to expected payments and the accretion of these obligations to theirexpected payment amounts are reflected within Imputed interest expense and contingent payment arrangements. For Affiliates accounted for under the equitymethod of accounting, the Company records a liability when a payment becomes probable in Payables and accrued liabilities, with a corresponding increaseto the carrying value of the Affiliate in Equity method investments in Affiliates in the Consolidated Balance Sheets.(n)Income TaxesThe Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for theexpected future tax consequences of differences between the financial reporting bases of assets and liabilities and their respective tax bases, using tax rates ineffect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized inIncome tax expense in the Consolidated Statements of Income in the period when the change is enacted.The Company regularly assesses the recoverability of its deferred income tax assets to determine whether these assets are more-likely-than-not to berealized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxabletemporary differences, projected future taxable income, tax planning strategies and results of recent operations. If the Company determines that it would beable to realize its deferred tax assets in the future in excess of their recorded amount, or that the recorded deferred tax assets are not realizable, the Companywould adjust the deferred tax asset valuation allowance to record the deferred tax assets at their current value, which would increase or decrease Income taxexpense, respectively.The Company records unrecognized tax benefits based on whether it is more-likely-than-not that the uncertain tax positions will be sustained on thebasis of the technical merits of the position. If it is determined an uncertain tax position is more-likely-than-not to be sustained, the Company records thelargest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority in Income tax expense.Interest and penalties related to unrecognized tax benefits are also recorded in Income tax expense.On December 22, 2017, changes in U.S. tax laws were enacted, which significantly revised U.S. corporate income tax by, among other things, loweringcorporate income tax rates, implementing a modified territorial tax system and imposing a one-time transition tax on deemed repatriated foreign earnings andprofits. The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of GAAP in situations when a Company does not have thenecessary information available, prepared or analyzed to complete the accounting for certain income tax effects of the changes in U.S. tax laws and allows theCompany to record provisional amounts. Changes to provisional amounts or new amounts resulting from new guidance, interpretations or other informationor from further evaluation of the impact of the changes in U.S. tax laws will be recorded in subsequent reporting periods not to extend beyond one year fromthe enactment date.(o)Foreign Currency TranslationAssets and liabilities denominated in a functional currency other than U.S. dollars are translated into U.S. dollars using exchange rates in effect as of thebalance sheet date. Revenue and expenses denominated in a functional currency other than U.S. dollars are translated into U.S. dollars using averageexchange rates for the relevant period. Because of the long-term nature of the Company’s investments in its Affiliates, net translation exchange gains andlosses resulting from foreign currency translation are recorded in Accumulated other comprehensive loss as a separate component of stockholders’ equity.Foreign currency transaction gains and losses are reflected in Investment and other income.(p)Concentration of Credit RiskFinancial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash investments. TheCompany and its Affiliates maintain cash and cash equivalents, investments and, at times, certain49Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)financial instruments with various high credit-quality financial institutions. These financial institutions are typically located in countries in which theCompany and its Affiliates operate. For the Company and certain Affiliates, cash deposits at a financial institution may exceed Federal Deposit InsuranceCorporation insurance limits.(q)Revenue RecognitionThe Company’s revenue primarily represents asset and performance based fees earned by its consolidated Affiliates for managing the assets of clients.Asset based fees are recognized as services are rendered and are typically based upon a percentage of the value of a client’s assets under management. Anyfees collected in advance are deferred and recognized as income over the period earned. Performance fees are generally assessed as a percentage of theinvestment performance realized on a client’s account. Performance fees are recognized when they are earned (i.e., when they become billable to customersand are not subject to claw-back) based on the contractual terms of agreements and when collection is reasonably assured. Carried interest is recognized uponthe earlier of the termination of the investment product or when the likelihood of claw-back is improbable. Also included in revenue are fees earned bybroker-dealers and administrative fees for services provided to Affiliate sponsored investment products.The Company and certain of its consolidated Affiliates have contractual arrangements with third parties to provide certain distribution-related services.These third parties are primarily compensated based on the value of client assets over time. Distribution-related fees earned by consolidated Affiliates arepresented in Revenue in the Consolidated Statements of Income gross of any related expenses when the Company or the Affiliate is the principal in its role asprimary obligor under its sales and distribution arrangements. Distribution-related expenses incurred by consolidated Affiliates are presented within Selling,general and administrative expenses in the Consolidated Statements of Income.(r)Earnings Per ShareThe calculation of basic earnings per share is based on the weighted average number of shares of the Company’s common stock outstanding during theperiod. Diluted earnings per share is similar to basic earnings per share, but adjusts for the dilutive effect of the potential issuance of incremental shares of theCompany’s common stock.The Company had convertible securities outstanding during the periods presented and is required to apply the if-converted method to these securities inits calculation of diluted earnings per share. Under the if-converted method, shares that are issuable upon conversion are deemed outstanding, regardless ofwhether the securities are contractually convertible into the Company’s common stock at that time. For this calculation, the interest expense (net of tax)attributable to these dilutive securities is added back to Net income (controlling interest), reflecting the assumption that the securities have been converted.Issuable shares for these securities and related interest expense are excluded from the calculation if an assumed conversion would be anti-dilutive to dilutedearnings per share.(s)Share-Based Compensation PlansThe Company recognizes expenses for all share-based payments based on their grant date fair values over the requisite service period. The Companyrecords these expenses only for awards that are expected to vest.Tax windfalls or shortfalls are recognized in Income tax expense and have been classified as operating activities in the Consolidated Statements of CashFlows. Taxes paid by the Company when it withholds shares to satisfy tax withholding obligations are classified as a financing activity.Prior to 2016, the Company reported any tax benefits realized upon the exercise of stock options or vesting of restricted stock that were in excess of theexpense recognized for reporting purposes as a financing activity in the Consolidated Statements of Cash Flows. If the tax benefit ultimately realized wasgreater than or less than the expense recognized, the tax windfall or shortfall was recognized in stockholders’ equity. To the extent the shortfall exceeded thecumulative windfall tax benefits, the excess was recognized in Income tax expense.(t)Recent Accounting DevelopmentsEffective January 1, 2017, the Company adopted Accounting Standard Update (“ASU”) 2016-07, Investments - Equity Method and Joint Ventures:Simplifying the Transition to the Equity Method of Accounting, and ASU 2016-06, Derivatives, and Hedging: Contingent Put and Call Options in DebtInstruments. The adoption of these updates did not have a significant impact on the Company’s Consolidated Financial Statements.50Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09, Revenue from Contracts with Customers, and subsequentlyissued several related amendments. The standard provides a comprehensive model for revenue recognition and is effective for the Company and itsconsolidated Affiliates for interim and annual periods beginning after December 15, 2017 and for interim and annual periods beginning after December 15,2018 for the Company’s equity method Affiliates. The standard may be adopted using either the full or modified retrospective method. The Company hasselected the modified retrospective method where the cumulative effect of initially applying the standard is recognized within the Company’s ConsolidatedFinancial Statements as of January 1, 2018. As of December 31, 2017, the Company does not expect a significant impact to its Consolidated FinancialStatements upon adoption of the standard as it relates to the timing of recognition of its Revenue, presentation of Revenue on a gross or net basis, or thecapitalization of revenue related costs. The Company will continue to assess the impact of adoption for its equity method Affiliates.In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities. Under the new standard, all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) willgenerally be measured at fair value with any changes recognized through earnings. The standard is effective for interim and annual periods beginning afterDecember 15, 2017 and must be adopted using a modified retrospective method. The Company does not expect the adoption of this standard to have asignificant impact on its Consolidated Financial Statements.In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to record right-of-use assets and lease liabilities arising from mostoperating leases on the statement of financial position. The standard is effective for interim and annual periods beginning after December 15, 2018 for theCompany and its consolidated Affiliates and for interim and annual periods beginning after December 15, 2019 for the Company’s equity method Affiliates.The standard must be adopted using a modified retrospective method. The Company is evaluating the impact of this standard on its Consolidated FinancialStatements.In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, which clarifieshow cash receipts and cash payments are classified in the statement of cash flows. The standard is effective for interim and annual periods beginning afterDecember 15, 2017 and must be adopted using a full retrospective method. The Company does not expect the adoption of this standard to have a significantimpact on its Consolidated Financial Statements.In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, which provides guidance on evaluating whether transactionsshould be accounted for as acquisitions (or disposals) of assets or businesses. The standard is effective for interim and annual periods beginning afterDecember 15, 2017. The Company will apply the standard prospectively upon adoption. The impact of this standard on the Company’s ConsolidatedFinancial Statements will depend on acquisitions (or disposals) of assets or businesses by the Company in periods following adoption.In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Accounting for Goodwill Impairment. Under the newstandard, a goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The standard is effective for interimand annual periods beginning after December 15, 2019. The Company will apply the standard prospectively upon adoption. The Company is evaluating theimpact of this standard on its Consolidated Financial Statements.In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation, which simplifies modification accounting related to share-basedarrangements. Under the new standard, modification assessments will not be required if fair value, vesting conditions and classification would be unaffectedby a modification. The standard is effective for interim and annual periods beginning after December 15, 2017. The Company will apply the standardprospectively upon adoption. The Company does not expect the adoption of this standard to have a significant impact on its Consolidated FinancialStatements.2.Investments in Marketable SecuritiesInvestments in marketable securities at December 31, 2016 and 2017 were $122.4 million and $77.8 million, respectively. The following is a summary ofthe cost, gross unrealized gains and losses and fair value of investments classified as available-for-sale and trading:51Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Available-for-Sale Trading December 31, 2016 December 31, 2017 December 31, 2016 December 31, 2017Cost $66.1 $18.3 $34.4 $48.8Unrealized Gains 17.6 2.7 6.6 10.3Unrealized Losses (1.8) (0.4) (0.5) (1.9)Fair Value $81.9 $20.6 $40.5 $57.2For the years ended December 31, 2016 and 2017, the Company received proceeds of $61.1 million and $82.3 million, respectively, from the sale ofinvestments classified as available-for-sale and recorded net gains of $19.2 million and $29.2 million, respectively. For the years ended December 31, 2016and 2017, the Company received proceeds of $82.8 million and $29.9 million, respectively, from the sale of investments classified as trading and recordednet gains of $1.0 million and $6.6 million, respectively. The realized gains and losses on securities held in Affiliate sponsored consolidated products wererecorded in Other operating expenses (net), other realized gains and losses were recorded in Investment and other income.3.Other InvestmentsOther investments consist of investments in funds advised by Affiliates that are carried at fair value. The income or loss related to these investments isrecorded in Investment and other income. See Note 11 for additional information on Other investments.4.Investments in Affiliates and Affiliate Sponsored Investment ProductsInvestments in AffiliatesThe Company’s Affiliates are consolidated or accounted for under the equity method, depending upon the underlying structure of and relationship witheach Affiliate.Substantially all of the Company’s consolidated Affiliates are considered VIEs. The unconsolidated assets, net of liabilities and non-controlling interestsof equity method Affiliates considered VIEs, and the Company’s maximum risk of loss were as follows: December 31, 2016 December 31, 2017 UnconsolidatedVIE Net Assets Carrying Value andMaximum Exposureto Loss UnconsolidatedVIE Net Assets Carrying Value andMaximum Exposureto LossAffiliates accounted for under the equity method $1,047.6 $2,846.8 $1,594.4 $2,765.7Affiliate Sponsored Investment ProductsThe net assets of Affiliate sponsored investment products that were considered VIEs accounted for under the equity method and the Company’smaximum risk of loss were as follows: December 31, 2016 December 31, 2017 UnconsolidatedVIE Net Assets Carrying Value andMaximum Risk of Loss UnconsolidatedVIE Net Assets Carrying Value andMaximum Risk of LossAffiliate sponsored investment products $1,756.6 $9.4 $2,154.6 $10.25.Senior Bank DebtThe Company has a senior unsecured multicurrency revolving $1.45 billion credit facility and a senior unsecured $385.0 million term loan facility. Thecredit facilities mature on September 30, 2020.52Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Subject to certain conditions, the Company may further increase the commitments under the revolver by up to $350.0 million and borrow up to anadditional $65.0 million under the term loan. The Company pays interest on any outstanding obligations under the credit facilities at specified rates, basedeither on the LIBOR rate or the prime rate as in effect from time to time.As of December 31, 2016 and 2017, the Company had outstanding borrowings under the revolver of $485.0 million and $425.0 million, respectively,and the weighted-average interest rate on outstanding borrowings was 1.88% and 2.76%, respectively. As of December 31, 2016 and 2017, the Company hadoutstanding borrowings under the term loan of $385.0 million in each period, and the weighted-average interest rate on outstanding borrowings was 1.87%and 2.69%, respectively. The Company pays commitment fees on the unused portion of its revolver. For the years ended December 31, 2016 and 2017, thesefees amounted to $1.0 million and $1.5 million, respectively.The credit facilities contain financial covenants with respect to leverage and interest coverage, as well as customary affirmative and negative covenants,including limitations on priority indebtedness, asset dispositions and fundamental corporate changes, and certain customary events of default.6.Senior NotesIn 2017, the Company redeemed, canceled and retired all $200.0 million principal amount outstanding of its 6.375% senior unsecured notes due 2042 ata redemption price equal to 100% of the principal amount. At December 31, 2017, the Company had two senior notes outstanding and their respectiveprincipal terms are summarized in the following table: 2024SeniorNotes 2025SeniorNotesIssue date February 2014 February 2015Maturity date February 2024 August 2025Potential Call Date(1) Any Time Any TimePar value (in millions) $400.0 $350.0Call Price(1) As Defined As Defined Stated coupon 4.25% 3.50%Coupon frequency Semi-annually Semi-annually__________________________(1) The senior notes may be redeemed at any time, in whole or in part, at a make-whole redemption price plus accrued and unpaid interest.7.Convertible SecuritiesAt December 31, 2017, the Company had junior convertible trust preferred securities outstanding (the “junior convertible securities”). The carryingvalue and principal amount at maturity of the junior convertible securities were as follows: December 31, 2016 December 31, 2017 CarryingValue Principal Amountat Maturity CarryingValue Principal Amountat MaturityJunior convertible securities(1) $307.5 $430.8 $309.9 $430.8__________________________(1) The carrying value is accreted to the principal amount at maturity over a remaining life of 20 years.The junior convertible securities bear interest at a rate of 5.15% per annum, payable quarterly in cash. Each $50 security is convertible, at any time, into0.25 shares of the Company’s common stock, which represents a conversion price of $200 per share, subject to customary anti-dilution adjustments. Holdersof the junior convertible securities have no rights to put these securities to the Company. Upon conversion, holders will receive cash or shares of theCompany’s common stock, or a combination thereof, at the Company’s election. The Company may redeem the junior convertible securities if the closingprice of its common stock exceeds $260 per share for 20 trading days in a period of 30 consecutive trading days. The junior convertible securities areconsidered contingent payment debt instruments under federal income tax regulations, which require the Company to deduct interest in an amount greaterthan its reported interest expense. These deductions will generate annual53Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)deferred tax liabilities of $7.2 million. These deferred tax liabilities will be reclassified directly to stockholders’ equity if the Company’s common stock istrading above certain thresholds at the time of the conversion of the securities.8.Forward Equity and Equity Distribution ProgramThe Company has equity distribution and forward equity agreements with several major securities firms under which it may, from time to time, issue andsell shares of its common stock (immediately or on a forward basis) having an aggregate sales price of up to $500.0 million (the “equity distributionprogram”). As of December 31, 2017, no sales have occurred under the equity distribution program.In 2016, the Company entered into an agreement to sell approximately 2.9 million shares of the Company’s common stock at a price of $167.25 pershare on a forward basis and issued 2.7 million shares to settle a portion of this forward equity sale and received proceeds of $440.3 million, and net settled0.2 million shares for cash at an average share price of $144.59. As of December 31, 2016, no shares remained outstanding under this agreement.9.Derivative Financial InstrumentsFrom time to time, the Company seeks to offset its exposure to interest rate and market changes and certain of its Affiliates seek to offset their exposure tochanges in foreign exchange rates by entering into derivative contracts.For the years ended December 31, 2016 and 2017, the Company’s Affiliates realized $0.2 million and $1.6 million of gains, respectively, and $1.2million and $2.2 million of losses, respectively, upon the settlement of certain foreign currency forward contracts. Such realized gains and losses arepresented in Revenue, Operating expenses or Investment and other income, depending on the risk being hedged. At December 31, 2016 and 2017, theCompany’s Affiliates had unrealized gains of $0.6 million and $0.2 million, respectively, and unrealized losses of $0.5 million and $0.6 million,respectively, related to outstanding foreign currency forward contracts. Such unrealized gains and losses are presented within Accumulated othercomprehensive loss.During the fourth quarter of 2017, the Company recognized an expense of $2.5 million under a market based derivative contract. This contract expiredon December 29, 2017.10.Commitments and ContingenciesFrom time to time, the Company and its Affiliates may be subject to claims, legal proceedings and other contingencies in the ordinary course of theirbusiness activities. Any such matters are subject to various uncertainties, and it is possible that some of these matters may be resolved in a mannerunfavorable to the Company or its Affiliates. The Company and its Affiliates establish accruals, as necessary, for matters for which the outcome is probableand the amount of the liability can be reasonably estimated.In 2017, Third Avenue Management, LLC (“Third Avenue”) settled various legal actions relating to the liquidation and closure of the Third AvenueFocused Credit Fund, including those against the Company. Third Avenue and its insurers paid amounts due under the settlement.The Company has committed to co-invest in certain Affiliate sponsored investment products. As of December 31, 2017, these unfunded commitmentswere $98.8 million and may be called in future periods.As of December 31, 2017, the Company was contingently liable, upon achievement by certain Affiliates of specified financial targets, to make paymentsthrough 2019 related to the Company’s investments in these Affiliates. For its consolidated Affiliates, the Company was contingently liable for up to $18.2million in payments, and expected to make payments of $10.2 million ($8.2 million in 2018). The present value of these expected payments was $9.4million. For its equity method Affiliates, the Company was contingently liable to make payments up to $170.0 million through 2018, and expected to makeno payments.Affiliate equity interests provide holders with a conditional right to put their interests to the Company over time. See Note 20. In addition, in connectionwith an investment in an Affiliate accounted for under the equity method, the Company entered into an arrangement with a minority owner of the Affiliatethat gives such owner the right to sell a portion of its ownership interest in the Affiliate to the Company annually beginning in the fourth quarter of 2018.The purchase price of these conditional purchases will be at fair market value on the date of the transaction.54Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company and certain Affiliates operate under regulatory authorities that require the maintenance of minimum financial or capital requirements.Management is not aware of any significant violations of such requirements.11.Fair Value MeasurementsThe following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis: Fair Value Measurements December 31, 2016 Level 1 Level 2 Level 3Financial Assets Cash equivalents $64.1 $64.1 $— $—Investments in marketable securities(1) Trading securities 40.5 40.5 — —Available-for-sale securities 81.9 81.9 — —Other investments 3.4 3.4 — —Foreign currency forward contracts(2) 0.6 — 0.6 —Financial Liabilities(2) Contingent payment arrangements $8.6 $— $— $8.6Affiliate equity obligations 12.1 — — 12.1Foreign currency forward contracts 0.5 — 0.5 — Fair Value Measurements December 31, 2017 Level 1 Level 2 Level 3Financial Assets Cash equivalents $40.4 $40.4 $— $—Investments in marketable securities(1) Trading securities 57.2 57.2 — —Available-for-sale securities 20.6 20.6 — —Foreign currency forward contracts(2) 0.2 — 0.2 —Financial Liabilities(2) Contingent payment arrangements $9.4 $— $— $9.4Affiliate equity obligations 49.2 — — 49.2Foreign currency forward contracts 0.6 — 0.6 —__________________________(1) Principally investments in equity securities.(2) Amounts are presented within Other assets or Other liabilities.During 2017, the Company measured the fair value of one of its equity method investments using a discounted cash flow analysis. See Note 13.The following are descriptions of the significant financial assets and liabilities measured at fair value and the fair value methodologies used.Cash equivalents consist primarily of highly liquid investments in daily redeeming money market funds, without enacted liquidity fees or redemptiongates that are valued at net asset value (“NAV”).Investments in marketable securities consist primarily of investments in publicly traded securities and funds advised by Affiliates that are valued at NAV.Publicly traded securities valued using unadjusted quoted market prices for identical55Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)instruments in active markets are classified as level 1. Publicly traded securities valued using quoted prices for similar instruments in active markets orquoted prices for identical or similar instruments in markets that are not active are classified as level 2. Investments in funds advised by Affiliates that arevalued at NAV are classified as level 1.Contingent payment arrangements represent the present value of the expected future settlement of contingent payment arrangements related to theCompany’s investments in consolidated Affiliates. The significant unobservable inputs that are used in the fair value measurement of these obligations aregrowth and discount rates. Increases in the growth rate result in a higher obligation while increases in the discount rate results in a lower obligation.Affiliate equity obligations include agreements to repurchase Affiliate equity. The significant unobservable inputs that are used in the fair valuemeasurement of the agreements to repurchase Affiliate equity are growth and discount rates. Increases in the growth rate result in a higher obligation whileincreases in the discount rate results in a lower obligation.Foreign currency forward contracts use model-derived valuations in which all significant inputs are observable in active markets to determine fairvalue.It is the Company’s policy to value financial assets or liabilities transferred as of the beginning of the period in which the transfer occurs. There were nosignificant transfers of financial assets or liabilities from level 1 to level 2 in 2016 or 2017.Level 3 Financial Assets and LiabilitiesThe following tables present the changes in level 3 liabilities: For the Years Ended December 31, 2016 2017 ContingentPaymentArrangements Affiliate EquityObligations Contingent PaymentArrangements Affiliate EquityObligationsBalance, beginning of period $10.2 $62.3 $8.6 $12.1Net realized and unrealized (gains) losses(1) (1.6) 3.1 7.6 5.5Purchases and issuances(2) — 69.1 — 206.1Settlements and reductions — (122.4) (6.8) (174.5)Balance, end of period $8.6 $12.1 $9.4 $49.2 Net change in unrealized (gains) losses relating to instruments still held atthe reporting date $(1.6) $— $2.8 $—__________________________(1) Accretion and changes in the expected value of the Company’s contingent payment arrangements and Affiliate equity obligations are recorded inImputed interest expense and contingent payment arrangements.(2) Includes transfers from Redeemable non-controlling interests and other activity.The following table presents certain quantitative information about the significant unobservable inputs used in valuing the Company’s level 3 financialliabilities: Quantitative Information about Level 3 Fair Value Measurements ValuationTechniques UnobservableInput Fair Value atDecember 31, 2016 Range at December31, 2016 Fair Value atDecember 31, 2017 Range at December31, 2017Contingent payment arrangements Discounted cash flow Growth rates $8.6 3% - 8% $9.4 7% - 8% Discount rates 14% - 15% 15% - 16%Affiliate equity obligations Discounted cash flow Growth rates 12.1 4% - 10% 49.2 0% - 11% Discount rates 15% - 16% 12% - 16%Investments Measured at NAV as a Practical Expedient56Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company’s Affiliates sponsor investment products in which the Company and Affiliates may make general partner and seed capital investments. TheCompany uses the NAV of these investments as a practical expedient for their fair value. The following table summarizes the nature of the Company’sinvestments, unfunded commitments and any related liquidity restrictions or other factors that may impact the ultimate value realized: December 31, 2016 December 31, 2017Category of Investment Fair Value UnfundedCommitments Fair Value UnfundedCommitmentsPrivate equity(1) $137.8 $92.2 $156.1 $98.8Other funds(2) 9.7 — 8.9 — Other investments(3) $147.5 $92.2 $165.0 $98.8__________________________(1) The Company uses NAV as a practical expedient one quarter in arrears (adjusted for current period calls and distributions) to determine the fair value.These funds primarily invest in a broad range of private equity funds, as well as making direct investments. Distributions will be received as theunderlying assets are liquidated over the life of the funds, which is generally up to 15 years.(2) These are multi-disciplinary funds that invest across various asset classes and strategies, including long/short equity, credit and real estate. Investmentsare generally redeemable on a daily, monthly or quarterly basis.(3) Fair value attributable to the controlling interest was $59.9 million and $80.1 million as of December 31, 2016 and 2017, respectively.Other Financial Assets and Liabilities Not Carried at Fair ValueThe carrying amount of Receivables and Payables and accrued liabilities approximates fair value because of the short-term nature of these instruments.The carrying value of notes receivable, which is reported in Other assets, approximates fair value because interest rates and other terms are at market rates. Thecarrying value of the credit facilities, which is reported in Senior bank debt, approximates fair value because the debt has variable interest based on selectedshort-term rates. The following table summarizes the Company’s other financial liabilities not carried at fair value: December 31, 2016 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Fair ValueHierarchySenior notes $945.1 $936.0 $745.7 $765.2 Level 2Convertible securities 307.5 466.9 309.9 549.8 Level 212.Goodwill and Acquired Client RelationshipsThe following tables present the changes in the Company’s consolidated Affiliates’ Goodwill and components of Acquired client relationships (net): Goodwill 2016 2017Balance, as of January 1, $2,668.4 $2,628.1Foreign currency translation (40.3) 34.4Balance, as of December 31, $2,628.1 $2,662.5As of September 30, 2017, the Company completed impairment assessments on its goodwill and no impairments were indicated. 57Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Acquired Client Relationships (Net) Definite-lived Indefinite-lived Total Gross BookValue AccumulatedAmortization Net BookValue Net BookValue Net BookValueBalance, as of December 31, 2015 $1,301.8 $(680.4) $621.4 $1,065.0 $1,686.4Intangible amortization and impairments — (107.7) (107.7) (2.5) (110.2)Foreign currency translation (11.8) — (11.8) (67.0) (78.8)Balance, as of December 31, 2016 $1,290.0 $(788.1) $501.9 $995.5 $1,497.4Intangible amortization and impairments — (86.4) (86.4) — (86.4)Foreign currency translation 5.5 — 5.5 33.2 38.7Balance, as of December 31, 2017 $1,295.5 $(874.5) $421.0 $1,028.7 $1,449.7Definite-lived acquired client relationships are amortized over their expected period of economic benefit. The Company recorded amortization expense,in Intangible amortization and impairments, for these relationships of $115.4 million, $107.7 million and $86.4 million, respectively, for the years endedDecember 31, 2015, 2016 and 2017. Based on relationships existing as of December 31, 2017, the Company estimates that its consolidated annualamortization expense will be approximately $85 million in 2018 and 2019, $50 million in 2020 and $30 million in 2021 and 2022.During 2017, the Company completed impairment assessments on its definite-lived and indefinite-lived acquired client relationships and noimpairments were indicated.13.Equity Method Investments in AffiliatesIn 2016, the Company completed investments in Systematica Investments L.P. and Baring Private Equity Asia, both of which closed on January 4, 2016,Capula Investment Management, LLP, Mount Lucas Management LP and Capeview Capital LLP, all of which closed on July 1, 2016, Partner FundManagement, L.P., which closed on September 30, 2016, and Winton Group Ltd., which closed on October 4, 2016. The purchase price allocations werecompleted using financial models that included assumptions of expected market performance, net client cash flows and discount rates. The majority of theconsideration paid is deductible for U.S. tax purposes over a 15-year life. The financial results of certain equity method Affiliates are recognized in theConsolidated Financial Statements one quarter in arrears.The purchase price allocation for the 2016 investments was as follows: TotalDefinite-lived acquired client relationships(1) $560.8Indefinite-lived acquired client relationships 36.9Tangible assets 2.0Deferred tax liability (91.8)Goodwill 854.4Consideration paid $1,362.3__________________________(1) The expected period of economic benefit utilized in the purchase price allocation for these definite-lived acquired client relationships was 15 years.For these new investments, the Company recorded amortization expense on the definite-lived acquired client relationships of $17.0 million and $58.0million for the years ended December 31, 2016 and 2017, respectively.58Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The following table presents the change in Equity method investments in Affiliates: 2016 2017Balance, January 1,$1,937.1 3,368.3Equity method earnings388.0 501.4Equity method intangible amortization and impairments(59.2) (199.2)Distributions of earnings from equity method investments(346.4) (429.8)Investments1,361.3 29.8Foreign currency translation8.0 62.3Other(1)79.5 (28.1)Balance, December 31,$3,368.3 $3,304.7__________________________(1) Primarily reflects deferred income taxes recorded on new investments.The definite-lived acquired relationships at the Company’s equity method Affiliates are amortized over their expected period of economic benefit. TheCompany recognized amortization expense for these relationships of $34.3 million, $59.2 million and $106.1 million, respectively, for the years endedDecember 31, 2015, 2016 and 2017. Based on relationships existing as of December 31, 2017, the Company estimates the annual amortization expenseattributable to its existing equity method Affiliates to be approximately $120 million in each of the next five years.During 2017, the Company determined that the fair value of an equity method investment had declined below its carrying value. The decline in the fairvalue of this investment was the result of a cumulative decline in assets under management, coupled with the recent loss of a significant client, which hasdecreased the forecasted revenue of the firm. The fair value of the investment was determined using a discounted cash flow analysis, a level 3 fair valuemeasurement, that projected future cash flows associated with the investment and discount rates that were developed with input from valuation experts. Thesignificant assumptions used in the cash flow analysis include a projected growth rate of 10.0%, discount rates of 14.0% and 25.0% for asset and performancebased fees, respectively, and a market participant tax rate of 25.0%. The Company considered the decline in fair value to be other-than-temporary and,accordingly, the Company recognized an impairment of $93.1 million. For the Company’s remaining equity and cost method investments, the Companycompleted its annual evaluation and no impairments were identified.The following table presents summarized financial information for Affiliates accounted for under the equity method: For the Years Ended December 31, 2015(2) 2016(2) 2017Revenue(1) $2,217.1 $2,200.9 $3,126.3Net income(1) 431.5 1,068.9 2,182.7 December 31, 2016 2017Assets $1,915.3 $3,324.9Liabilities and Non-controlling interests 862.4 1,405.5__________________________(1) Revenue and the associated Net income include asset and performance based fees and the impact of consolidated investment products.(2) Revenue and Net income reflect investments in new Affiliates for the full-year, regardless of the date of the Company’s investment.The Company’s share of undistributed earnings from equity method investments was $192.5 million as of December 31, 2017.59Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company has determined that one of its equity method Affiliates is significant under Rule 10-01(b)(1) of Regulation S-X. For the years endedDecember 31, 2016 and 2017, this equity method Affiliate recognized revenue of $944.1 million and $1,317.8 million, respectively, and net income of$529.0 million and $806.6 million, respectively.14.Fixed Assets and Lease CommitmentsFixed assets consisted of the following: December 31, 2016 2017Building and leasehold improvements $103.5 $111.9Software 52.5 50.8Equipment 39.5 44.5Furniture and fixtures 20.8 21.4Land, improvements and other 17.9 18.7Fixed assets, at cost 234.2 247.3Accumulated depreciation and amortization (124.1) (136.3)Fixed assets, net $110.1 $111.0The Company and its consolidated Affiliates lease office space and equipment for their operations. At December 31, 2017, the Company’s aggregatefuture minimum payments for operating leases having initial or non-cancelable lease terms greater than one year were payable as follows:Year Required MinimumPayments2018 $37.02019 33.92020 35.32021 33.62022 26.6Thereafter 89.9Consolidated rent expense for 2015, 2016 and 2017 was $36.3 million, $35.5 million and $37.5 million, respectively.15.Payables and Accrued LiabilitiesPayables and accrued liabilities consisted of the following: December 31, 2016 2017Accrued compensation $418.5 $472.5Unsettled fund share payables 83.2 103.1Accrued income taxes 87.7 93.0Accrued share repurchases — 23.1Accrued professional fees 26.1 22.5Other 113.8 93.0Payables and accrued liabilities $729.3 $807.216.Related Party Transactions60Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)A prior owner of one of the Company’s Affiliates retained an interest in certain of the Affiliate’s private equity investment partnerships. The prior owner’sinterest is presented in the Company’s Consolidated Balance Sheets as either a liability in Other liabilities or as Non-controlling interests, depending on thestructure of the prior owner’s investments in the partnerships. The total liability was $67.8 million and $61.2 million at December 31, 2016 and 2017,respectively. The total non-controlling interest was $2.5 million at December 31, 2016.The Company and its Affiliates earn asset and performance based fees, distribution and servicing and other fees and incur distribution and servicing andother expenses for services provided to Affiliate sponsored investment products. In addition, Affiliate management owners and Company officers may serveas trustees or directors of certain investment vehicles from which the Company or an Affiliate earns fees.The Company had liabilities to related parties for contingent payment arrangements in connection with certain business combinations. The net presentvalue of the total amounts payable were $8.6 million and $9.4 million as of December 31, 2016 and 2017, respectively, and were included in Other liabilities.In 2016, there were no payments made associated with these liabilities. In 2017, the Company made $6.8 million in such payments. For the years endedDecember 31, 2016 and 2017, the Company adjusted its estimates of contingent payment obligations and recorded gains attributable to the controllinginterest of $2.8 million and expenses from adjustments to its contingent payment obligations of $6.6 million, respectively. These amounts are included inImputed interest expense and contingent payment arrangements.The Company has related party transactions in association with its Affiliate equity transactions, as more fully described in Notes 19 and 20.17.Stockholders’ EquityCommon StockThe Company is authorized to issue up to 150.0 million shares of Voting Common Stock and 3.0 million shares of Class B Non-Voting Common Stock.As more fully described in Note 8, the Company is party to an equity distribution program under which the Company may sell shares of its common stock.The Company’s Board of Directors authorized share repurchase programs in January 2017 and May 2015, authorizing the Company to repurchase up to1.9 million and 3.0 million shares of its common stock, respectively, and these authorizations have no expiry. In 2017, the Company repurchased 2.4 millionshares of this total authorized amount, at an average price per share of $173.19. As of December 31, 2017, 1.6 million shares remained available forrepurchase under the January 2017 Plan and no shares remained available for repurchase under the May 2015 Plan. See Note 27.The following is a summary of the Company’s share repurchase activity for the years ended December 31, 2015, 2016 and 2017:Year SharesRepurchased AveragePrice2015 1.7 $209.392016 0.2 161.162017 2.4 173.19Preferred StockThe Company is authorized to issue up to 5.0 million shares of Preferred Stock. Any such Preferred Stock issued by the Company may rank prior tocommon stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of commonstock.Financial InstrumentsThe Company’s junior convertible securities contain an embedded right for holders to receive shares of the Company’s common stock under certainconditions. These arrangements, as well as the equity distribution program, meet the definition of equity and are not required to be accounted for separatelyas derivative instruments.18.Share-Based Compensation61Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Share-Based Incentive PlansThe Company has established various plans under which it is authorized to grant restricted stock, restricted stock units, stock options and stockappreciation rights. The Company may also grant cash awards that can be notionally invested in one or more specified measurement funds, including theCompany’s common stock. Awards granted under the Company’s share-based incentive plans typically participate in any dividends declared, but suchamounts are deferred until delivery of the shares and are forfeitable if the requisite service is not satisfied. Dividends may be paid in cash or may be reinvestedin the Company’s common stock.The total fair value of share-based compensation awards that vested was $27.4 million, $20.7 million and $59.4 million during the years endedDecember 31, 2015, 2016 and 2017, respectively.Share-Based Incentive CompensationThe following is a summary of share-based compensation expense for the years ended December 31, 2015, 2016 and 2017:Year Share-BasedCompensationExpense Tax Benefit2015 $34.2 $13.22016 39.2 15.12017 40.4 13.6The excess tax benefit recognized from share-based incentive plans was $5.1 million and $10.9 million during the years ended December 31, 2016 and2017, respectively, and classified as an operating cash flow.The Company had $66.4 million and $63.5 million of unrecognized share-based compensation as of December 31, 2016 and 2017, respectively, whichwill be recognized over a weighted average period of approximately two years (assuming no forfeitures).Stock OptionsThe following table summarizes the transactions of the Company’s stock options: Stock Options WeightedAverageExercisePrice WeightedAverageRemainingContractualLife (years)Unexercised options outstanding—January 1, 20171.4 $108.53 Options granted0.0 168.60 Options exercised(0.7) 97.54 Options forfeited(0.1) 140.26 Unexercised options outstanding—December 31, 20170.6 122.04 3.9Exercisable at December 31, 20170.2 115.74 1.7The Company granted stock options with fair values of $1.0 million, $16.4 million and $0.8 million in 2015, 2016 and 2017, respectively. Stock optionsgenerally vest over a period of three to four years and expire seven years after the grant date. All options have been granted with exercise prices equal to theclosing price of the Company’s common stock on the grant date. In certain circumstances, option awards also require certain performance conditions to besatisfied in order for the options to be exercised.The Company generally uses treasury stock to settle stock option exercises. The total intrinsic value of options exercised during the years endedDecember 31, 2015, 2016 and 2017 was $130.2 million, $27.7 million and $50.8 million, respectively. The cash received for options exercised was $25.6million and $41.9 million during the years ended December 31, 2016 and 2017, respectively. As of December 31, 2017, the intrinsic value of exercisableoptions outstanding was $20.1 million, and 3.1 million options were available for grant under the Company’s option plans.62Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The fair value of options granted was estimated using the Black-Scholes option pricing model. The weighted average fair value of options grantedduring the years ended December 31, 2015, 2016 and 2017 was $54.92, $39.02 and $48.05, per option, respectively, based on the weighted-average grantdate assumptions stated below. For the Years Ended December 31, 2015 2016 2017Dividend yield0.0% 0.0% 0.5%Expected volatility(1)26.7% 30.7% 28.0%Risk-free interest rate(2)1.5% 1.6% 2.1%Expected life of options (in years)(3)5.0 5.7 5.7Forfeiture rate0.0% 0.0% 0.0%__________________________(1) Expected volatility is based on historical and implied volatility.(2) Risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant.(3) Expected life of options (in years) is based on the Company’s historical and expected exercise behavior.Restricted StockThe following table summarizes the transactions of the Company’s restricted stock: RestrictedStock WeightedAverageGrant DateValueUnvested units—January 1, 20170.6 $168.84Units granted0.2 152.99Units vested(0.4) 166.22Units forfeited(0.0) 170.39Unvested units—December 31, 20170.4 162.32The Company granted awards with fair values of $50.7 million, $28.0 million and $36.9 million in 2015, 2016 and 2017, respectively. These awardswere valued based on the closing price of the Company’s common stock on the grant date and contain vesting conditions requiring service over a period ofthree to four years. In certain circumstances, awards also require certain performance conditions to be satisfied.As of December 31, 2017, the Company had 1.1 million shares available for grant under its plans.19.Redeemable Non-Controlling InterestsAffiliate equity interests provide holders with an equity interest in one of the Company’s Affiliates, consistent with the structured partnership interests inplace at the respective Affiliate. Affiliate equity holders generally have a conditional right to put their interests to the Company at certain intervals (betweenfive and 15 years from the date the equity interest is received or on an annual basis following an Affiliate equity holder’s departure). The current redemptionvalue of the Company’s Affiliate equity interests is presented as Redeemable non-controlling interests. Changes in the current redemption value are recordedto Additional paid-in capital. When the Company has an unconditional obligation to repurchase Affiliate equity interests, they are reclassified to Otherliabilities. The following table presents the changes in Redeemable non-controlling interests:63Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2016 2017Balance, as of January 1,$612.5 $673.5Changes attributable to consolidated products16.1 12.4Transfers to Other liabilities(69.1) (192.3)Transfers from non-controlling interests42.6 76.8Changes in redemption value71.4 241.5Balance, as of December 31,$673.5 $811.920.Affiliate EquityAffiliate equity interests are allocated income in a manner that is consistent with the structured partnership interests in place at the respective Affiliate.The Company’s Affiliates generally pay quarterly distributions to Affiliate equity holders. Distributions paid to Affiliate equity holders were $431.4 million,$354.1 million and $352.2 million for the years ended December 31, 2015, 2016 and 2017, respectively.Affiliate equity interests provide the Company a conditional right to call (on an annual basis following an Affiliate equity holder’s departure) andAffiliate equity holders have a conditional right to put their interests at certain intervals (between five and 15 years from the date the equity interest isreceived or on an annual basis following an Affiliate equity holder’s departure). Affiliate equity holders are also permitted to sell their equity interests toother individuals or entities in certain cases, subject to the Company's approval or other restrictions. The purchase price of these conditional purchases aregenerally calculated based upon a multiple of cash flow distributions, which is intended to represent fair value. The Company, at its option, may pay forAffiliate equity purchases in cash, shares of its common stock or other forms of consideration and can consent to the transfer of these interests to otherindividuals or entities.The Company periodically repurchases Affiliate equity interests from and issues Affiliate equity interests to its Affiliate partners, its employees and itsofficers. The amount of cash paid for repurchases was $130.8 million, $115.8 million and $174.7 million for the years ended December 31, 2015, 2016 and2017, respectively. The total amount of cash received for issuances was $6.1 million, $11.8 million and $9.0 million for the years ended December 31, 2015,2016 and 2017, respectively. Sales and repurchases of Affiliate equity generally occur at fair value; however, the Company also grants Affiliate equity to its Affiliate partners, itsemployees and its officers as a form of compensation. If the equity is issued for consideration below the fair value of the equity or repurchased forconsideration above the fair value of the equity, then such difference is recorded as compensation expense over the requisite service period.The following is a summary of Affiliate equity expense: For the Years Ended December 31, 2015 2016 2017Controlling interest$16.9 $10.0 $13.2Non-controlling interest51.6 31.2 36.8Total$68.5 $41.2 $50.0The following is a summary of unrecognized Affiliate equity expense for the years ended December 31, 2015, 2016 and 2017: Unrecognized Affiliate Equity ExpenseYearControlling Interest Remaining Life Non-ControllingInterest Remaining Life2015$22.4 3 years $51.9 5 years201631.3 4 years 70.7 5 years201733.3 5 years 95.9 6 years64Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company records amounts receivable from and payable to Affiliate equity holders in connection with the transfer of Affiliate equity interests thathave not settled at the end of the period. The total receivable was $22.9 million and $12.4 million at December 31, 2016 and 2017, respectively, and wasincluded in Other assets. The total payable was $12.1 million and $49.2 million as of December 31, 2016 and 2017, respectively, and was included in Otherliabilities.Effects of Changes in the Company’s Ownership in AffiliatesThe Company periodically acquires interests from, and transfers interests to, Affiliate equity holders. Because these transactions do not result in a changeof control, any gain or loss related to these transactions is recorded to Additional paid-in capital, which increases or decreases the controlling interest’sequity. No gain or loss related to these transactions is recognized in the Consolidated Statements of Income or Comprehensive Income.While the Company presents the current redemption value of Affiliate equity within Redeemable non-controlling interests with changes in the currentredemption value increasing or decreasing the controlling interest’s equity over time, the following table discloses the cumulative effect that ownershipchanges had on the controlling interest’s equity related only to Affiliate equity transactions that settled during the periods: For the Years Ended December 31, 2015 2016 2017Net income (controlling interest) $509.5 $472.8 $689.5Increase / (decrease) in controlling interest paid-in capital from purchases and sales of Affiliateequity issuances 0.9 1.6 (1.0)Decrease in controlling interest paid-in capital related to Affiliate equity repurchases (87.6) (38.0) (116.2)Net income attributable to controlling interest and transfers from non-controlling interests $422.8 $436.4 $572.321.Benefit PlansThe Company has a defined contribution plan that is a qualified employee profit-sharing plan, covering substantially all of its employees. Under thisplan, the Company is able to make discretionary contributions for the benefit of its employees that are qualified plan participants, up to Internal RevenueService limits. The Company’s consolidated Affiliates have their own qualified defined contribution retirement plans covering their respective employees or,for several Affiliates, have their employees covered under the Company’s plan. In each case, the relevant Affiliate is able to make discretionary contributionsfor the benefit of its employees, as applicable, that are qualified plan participants, up to Internal Revenue Service limits. Consolidated expenses related tothese plans were $18.7 million, $18.9 million and $20.1 million for the years ended December 31, 2015, 2016 and 2017, respectively. The controllinginterest’s portion of expenses related to these plans were $3.1 million, $3.7 million and $3.9 million for the years ended December 31, 2015, 2016 and 2017,respectively.22.Income TaxesOn December 22, 2017, changes in U.S. tax laws were enacted, which significantly revised U.S. corporate income tax by, among other things, loweringcorporate income tax rates, implementing a modified territorial tax system and imposing a one-time transition tax on deemed repatriated foreign earnings andprofits.As of December 31, 2017, the Company had not completed its accounting for the tax effects of changes in U.S. tax laws. However, in accordance withSAB 118, the Company recorded a provisional one-time net benefit of $194.1 million as a reasonable estimate of the impacts of the changes in U.S. tax laws.The net benefit was primarily due to the re-measurement of the Company’s deferred tax assets and liabilities, principally deferred tax liabilities associatedwith its intangible assets and convertible securities, which resulted in a benefit of $216.9 million, partially offset by a $22.8 million transition tax on itsdeemed repatriated foreign earnings and profits.The Company is still analyzing certain aspects of the changes in U.S. tax laws and evaluating its calculations, which could potentially affect the re-measurement of its deferred tax assets and liabilities or give rise to new deferred tax amounts. The Company has also not yet completed its accounting for thetransition tax and the amount may change once the Company65Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)finalizes its calculation of foreign earnings and profits previously deferred from U.S. federal taxation and the amounts held in cash or other specified assets.The provisional amounts recorded by the Company are based on guidance, interpretations and other information available as of January 24, 2018. Theimpact of the changes in U.S. tax laws may be refined as further guidance, interpretations or information becomes available or upon completion by theCompany of its evaluation of the impact of the changes in U.S. tax laws.The Company’s consolidated income tax provision includes taxes attributable to the controlling interest and, to a lesser extent, taxes attributable to non-controlling interests. The 2017 provisional impact of the changes in U.S. tax laws is reflected in the tables below.The following table presents our consolidated provision for income taxes: For the Years Ended December 31, 2015 2016 2017Controlling interests: Current tax $152.4 $168.1 $173.8Intangible-related deferred taxes 77.7 84.3 (98.5)Other deferred taxes 27.7 (23.2) (24.9)Total controlling interests 257.8 229.2 50.4Non-controlling interests: Current tax $9.8 $8.2 $8.2Deferred taxes (4.2) (1.8) (0.2)Total non-controlling interests 5.6 6.4 8.0Provision for income taxes $263.4 $235.6 $58.4Income before income taxes (controlling interest) $767.3 $702.0 $739.9Effective tax rate attributable to controlling interests(1) 33.6% 32.6% 6.8%__________________________(1) Taxes attributable to the controlling interest divided by Income before income taxes (controlling interest).The consolidated provision for income taxes consisted of the following: For the Years Ended December 31, 2015 2016 2017Current: Federal $106.3 $103.4 $109.0State 18.3 22.9 18.9Foreign 37.6 50.0 54.1Total current 162.2 176.3 182.0Deferred: Federal 103.8 62.3 (124.9)State 14.8 10.0 10.4Foreign (17.4) (13.0) (9.1)Total deferred 101.2 59.3 (123.6)Provision for income taxes $263.4 $235.6 $58.4For financial reporting purposes, Income before income taxes consisted of the following:66Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended December 31, 2015 2016 2017Domestic $827.6 $688.1 $756.5International 263.0 286.5 310.6 $1,090.6 $974.6 $1,067.1The following table reconciles the U.S. federal statutory tax rate to the Company’s effective tax rate: For the Years Ended December 31, 2015 2016 2017Statutory U.S. federal tax rate35.0 % 35.0 % 35.0 %State income taxes, net of federal benefit2.6 2.9 2.7Effect of foreign operations(3.5) (4.6) (5.4)Equity compensation0.8 (0.4) (0.7)Effect of changes in tax law, rates(0.8) (0.3) (25.2)Other(0.5) — 0.4Effective tax rate (controlling interest)33.6 % 32.6 % 6.8 %Effect of income from non-controlling interests(9.2) (8.4) (1.3)Effective tax rate24.4 % 24.2 % 5.5 %Deferred income tax liability (net) reflects the expected future tax consequences of temporary differences between the financial reporting basis and taxbasis of the Company’s assets and liabilities. The significant components of the Company’s Deferred income tax liability (net) are as follows: December 31, 2016 2017Deferred Tax Assets State net operating loss carryforwards $17.4 $16.8Foreign loss carryforwards 14.6 16.3Tax benefit of uncertain tax positions 12.1 11.4Deferred compensation 34.1 10.4Foreign tax credits 10.0 —Accrued expenses 3.9 1.3Total deferred tax assets 92.1 56.2Valuation allowance (22.1) (24.1)Deferred tax assets, net of valuation allowance $70.0 $32.1Deferred Tax Liabilities Intangible asset amortization $(396.8) $(258.6)Non-deductible intangible amortization (177.0) (150.8)Convertible securities interest (109.0) (77.9)Deferred income (47.2) (5.9)Other (0.8) (6.3)Total deferred tax liabilities (730.8) (499.5)Deferred income tax liability (net) $(660.8) $(467.4)67Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)At December 31, 2017, the Company had available state net operating loss carryforwards of $432.6 million, which will expire over a 19-year period. AtDecember 31, 2017, the Company had foreign loss carryforwards of $61.5 million, of which $51.8 million will expire over a 20-year period and the balancewill carry forward indefinitely.The Company believes that it is more-likely-than-not that the benefit from a portion of the state and foreign loss carryforwards will not be realized andhas, therefore, recorded a valuation allowance of $24.1 million on the deferred tax assets related to these state and foreign loss carryforwards. For the yearsended December 31, 2016 and 2017, the Company increased its valuation allowance $1.6 million and $2.0 million, respectively, related to an increase in theloss carryforwards that are not expected to be realized.The Company continues not to provide for U.S. income taxes on the excess of the financial reporting basis over tax basis in the Company’s investmentsin foreign subsidiaries considered permanent in duration. Such amount would generally become taxable upon the repatriation of assets from, or a sale orliquidation of, the subsidiaries. While a determination of the potential amount of unrecognized deferred U.S. income tax liability related to these amounts isnot practicable because of the numerous assumptions associated with this hypothetical calculation, as of December 31, 2017, the estimated amount of suchdifference was $270.9 million.A reconciliation of the changes in unrecognized tax benefits is as follows: For the Years Ended December 31, 2015 2016 2017Balance, as of January 1, $28.8 $26.9 $26.8Additions based on current year tax positions 2.2 3.8 6.0Additions based on prior years’ tax positions 1.6 0.6 1.5Reductions related to lapses of statutes of limitations (4.3) (4.7) (2.3)Additions (reductions) related to foreign exchange rates (1.4) 0.2 0.4Balance, as of December 31, $26.9 $26.8 $32.4Included in the balance of unrecognized tax benefits at December 31, 2015, 2016 and 2017, are $25.3 million, $26.0 million and $32.4 million,respectively, of tax benefits that, if recognized, would favorably affect the Company’s effective tax rate.The Company records accrued interest and penalties, if any, related to unrecognized tax benefits in Income tax expense. The Company had $1.8 million,$1.4 million and $1.7 million in interest related to unrecognized tax benefits accrued at December 31, 2015, 2016 and 2017, respectively, which are includedin the table above. For the years ended December 31, 2015, 2016 and 2017, no significant interest or penalties were recorded in Income tax expense.The Company is subject to U.S. federal, state and local and foreign income tax in multiple jurisdictions. The Company is also periodically subject to taxexaminations in these jurisdictions. The completion of examinations may result in the payment of additional taxes and/or the recognition of tax benefits. TheCompany is generally no longer subject to income tax examinations by U.S. federal, state and local or foreign taxing authorities for periods prior to 2011.The Company does not expect any significant changes to its liability for tax benefits during the next 12 months.23.Earnings Per ShareThe calculation of basic earnings per share is based on the weighted average number of shares of the Company’s common stock outstanding during theperiod. Diluted earnings per share is similar to basic earnings per share, but adjusts for the dilutive effect of the potential issuance of incremental shares of theCompany’s common stock. The following is a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per shareavailable to common stockholders:68Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Years Ended December 31, 2015 2016 2017Numerator Net income (controlling interest) $509.5 $472.8 $689.5Interest expense on convertible securities, net of taxes 15.3 15.5 15.5Net income (controlling interest), as adjusted $524.8 $488.3 $705.0Denominator Average shares outstanding (basic) 54.3 54.2 56.0Effect of dilutive instruments: Stock options and restricted stock units 0.7 0.6 0.4Junior convertible securities 2.2 2.2 2.2Average shares outstanding (diluted) 57.2 57.0 58.6Average shares outstanding (diluted) in the table above exclude share awards that have not satisfied performance conditions and the anti-dilutive effectof the following shares: For the Years Ended December 31, 2015 2016 2017Stock options and restricted stock units0.0 0.6 0.1The Company may settle portions of its Affiliate equity purchases in shares of its common stock. Because it is the Company’s intent to settle thesepotential purchases in cash, the calculation of diluted earnings per share excludes any potential dilutive effect from possible share settlements of Affiliateequity purchases.24.Comprehensive IncomeThe following tables show the tax effects allocated to each component of Other comprehensive income (loss): For the Year Ended December 31, 2015 Pre-Tax Tax Benefit (Expense) Net of TaxForeign currency translation adjustment $(93.2) $— $(93.2)Change in net realized and unrealized gain (loss) on derivative securities 2.3 (0.4) 1.9Change in net unrealized gain (loss) on investment securities 34.8 (12.7) 22.1Other comprehensive income (loss) $(56.1) $(13.1) $(69.2) For the Year Ended December 31, 2016 Pre-Tax Tax Benefit (Expense) Net of TaxForeign currency translation adjustment $(115.3) $— $(115.3)Change in net realized and unrealized gain (loss) on derivative securities 0.3 (0.2) 0.1Change in net unrealized gain (loss) on investment securities (58.3) 23.1 (35.2)Other comprehensive income (loss) $(173.3) $22.9 $(150.4)69Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the Year Ended December 31, 2017 Pre-Tax Tax Benefit (Expense) Net of TaxForeign currency translation adjustment $128.0 $— $128.0Change in net realized and unrealized gain (loss) on derivative securities (0.7) (0.1) (0.8)Change in net unrealized gain (loss) on investment securities (15.0) 7.3 (7.7)Other comprehensive income (loss) $112.3 $7.2 $119.5The components of accumulated other comprehensive income (loss), net of taxes, were as follows: Foreign CurrencyTranslationAdjustment Realized andUnrealized Gains(Losses) onDerivative Securities Unrealized Gains(Losses) onInvestment Securities(1) TotalBalance, as of December 31, 2015 $(98.6) $0.3 $45.0 $(53.3)Other comprehensive gain (loss) before reclassifications (115.3) (1.0) (22.5) (138.8)Amounts reclassified — 1.1 (12.7) (11.6)Net other comprehensive gain (loss) (115.3) 0.1 (35.2) (150.4)Balance, as of December 31, 2016 $(213.9) $0.4 $9.8 $(203.7)Other comprehensive gain (loss) before reclassifications 128.0 (1.6) 15.7 142.1Amounts reclassified — 0.8 (23.4) (22.6)Net other comprehensive gain (loss) 128.0 (0.8) (7.7) 119.5Balance, as of December 31, 2017 $(85.9) $(0.4) $2.1 $(84.2)__________________________(1) See Note 2 for amounts reclassified from Other comprehensive income (loss).25.Selected Quarterly Financial Data (Unaudited)The following is a summary of the quarterly results of operations of the Company for the years ended December 31, 2016 and 2017: 2016 FirstQuarter SecondQuarter ThirdQuarter FourthQuarterRevenue $545.4 $554.1 $544.7 $550.3Operating income 246.8 247.0 238.5 301.9Income before income taxes 230.5 235.9 226.2 281.9Net income (controlling interest) 104.0 108.3 110.2 150.2Earnings per share (diluted) $1.90 $1.98 $2.02 $2.67 2017 FirstQuarter SecondQuarter ThirdQuarter FourthQuarter(1)Revenue $544.3 $570.9 $585.7 $604.1Operating income 262.5 275.9 289.5 280.0Income before income taxes 253.3 266.9 282.9 264.0Net income (controlling interest) 122.5 126.3 125.4 315.4Earnings per share (diluted) $2.13 $2.22 $2.22 $5.50__________________________70Table of ContentsAFFILIATED MANAGERS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(1) In the fourth quarter of 2017, the Company recorded a provisional one-time net benefit from changes in U.S tax laws (see Note 22) and an expenseassociated with the impairment of one of its Affiliates accounted for under the equity method (see Note 13).26.Segment and Geographic InformationIn the first quarter of 2017, the Company’s Chief Operating Decision Maker (the “CODM”) changed the manner in which he assesses the Company’sperformance. In 2016, the CODM assessed the performance of the Company in three business segments representing three distribution channels. Given anincrease in the number of the Company’s Affiliates accounted for under the equity method of accounting and changes in the way investment managementservices are delivered, during the first quarter of 2017, the CODM began to assess the performance of the Company as a single global active assetmanagement company. As a result, the CODM now reviews information organized around one operating segment to evaluate and manage the Company’sbusiness operations. Therefore, in the first quarter of 2017, the Company determined that it has one reportable segment. Prior period segment disclosures havebeen updated accordingly. In connection with this change, the Company completed impairment assessments based on its former three distribution channels,as well as its single global active asset management reporting unit, and determined that there were no impairments under either approach.The following table presents Revenue and Fixed assets (net) of the Company by geographic location. Revenue by geographic location is primarily basedon the location of an Affiliate. For the Years Ended December 31, 2015 2016 2017Revenue United States$1,657.2 $1,477.5 $1,571.4United Kingdom645.3 566.4 587.3Other182.0 150.7 146.3Total$2,484.5 $2,194.6 $2,305.0 December 31, 2015 2016 2017Fixed Assets, Net United States$98.6 $97.3 $97.8United Kingdom12.3 9.9 11.4Other3.2 2.9 1.8Total$114.1 $110.1 $111.027.Subsequent EventsThe Company’s Board of Directors authorized a share repurchase program in January 2018 authorizing the Company to repurchase up to 3.4 millionshares of its common stock, and this authorization has no expiry. As of the January 2018 authorization, there were a total of 5.0 million shares remainingavailable for repurchase under the Company’s repurchase programs. As of February 21, 2018, the Company had repurchased 0.7 million shares of commonstock, at an average share price of $193.18.71Table of ContentsSchedule IIValuation and Qualifying Accounts(in millions) BalanceBeginning ofPeriod AdditionsCharged to Costsand Expenses AdditionsCharged toOther Accounts Deductions BalanceEnd of PeriodIncome Tax Valuation Allowance Year Ending December 31, 2017 $22.1 $1.1 $0.9 $— $24.12016 20.5 1.3 0.3 — 22.12015 18.4 2.1 — — 20.5 Other Allowances(1) Year Ending December 31, 2017 $10.3 $0.6 $— $7.3 $3.62016 10.6 5.0 — 5.3 10.32015 12.1 0.7 — 2.2 10.6__________________________(1) Other Allowances represented reserves on notes received in connection with transfers of our interests in certain Affiliates, as well as other receivableamounts, which we considered uncollectible. Deductions represent the reversal of such reserves upon collection of the amounts due.72Table of ContentsItem 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A.Controls and ProceduresAs required by Rule 13a-15 under the Exchange Act, as of December 31, 2017, we carried out an evaluation under the supervision and with theparticipation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of ourdisclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded, as of the end of theperiod covered by this report, that our disclosure controls and procedures are effective to ensure that (i) information required to be disclosed by us in thereports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules andforms and (ii) such information is accumulated and communicated to our management, including our principal executive officer and principal financialofficers, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we andour management recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achievingthe desired control objectives, and our management necessarily was required to apply its judgment in evaluating and implementing possible controls andprocedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their stated objectives and our principalexecutive officer and principal financial officers concluded that our disclosure controls and procedures are effective at the reasonable assurance level. Wereview on an ongoing basis and document our disclosure controls and procedures, and our internal control over financial reporting, and we may from time totime make changes in an effort to enhance their effectiveness and ensure that our systems evolve with our business. See Item 8 for “Management’s Report onInternal Control over Financial Reporting.”Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has issued an attestation report on our internal control over financialreporting, which is included in Item 8.No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during thefiscal quarter ended December 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Item 9B.Other InformationNone.73Table of ContentsPART IIIItem 10.Directors, Executive Officers and Corporate GovernanceInformation required by this Item will be set forth in our proxy statement for our 2018 Annual Meeting of shareholders (to be filed within 120 days afterDecember 31, 2017) (the “Proxy Statement”), and is incorporated herein by reference.Item 11.Executive CompensationInformation required by this Item will be set forth in our Proxy Statement, and is incorporated herein by reference.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersInformation required by this Item will be set forth in our Proxy Statement, and is incorporated herein by reference.Item 13.Certain Relationships and Related Transactions and Director IndependenceInformation required by this Item will be set forth in our Proxy Statement, and is incorporated herein by reference.Item 14.Principal Accountant Fees and ServicesInformation required by this Item will be set forth in our Proxy Statement, and is incorporated herein by reference.74Table of ContentsPART IVItem 15.Exhibits, Financial Statement Schedules(a)(1) Financial Statements: See Item 8 of this Annual Report on Form 10-K.(2) Financial Statement Schedule required by Part II, Item 8 is included in Item 8: Page No.Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2017, 2016 and 2015 72 (3) Exhibits: See the Exhibit Index below and incorporated by reference herein.Item 16.Form 10-K SummaryNone.75Table of ContentsExhibit Index3.1Amended and Restated Certificate of Incorporation (incorporated by reference to the Company’s Registration Statement on Form S-1/A (No.333-34679), filed October 29, 1997)3.2Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to the Company’s Registration Statement onForm S-8 (No. 333-129748), filed November 16, 2005)3.3Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to the Company’s Proxy Statement on Schedule14A (No. 001-13459), filed April 28, 2006)3.4Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to the Company’s Quarterly Report on Form 10-Q (No. 001-13459), filed August 3, 2017)3.5Amended and Restated By-laws (incorporated by reference to the Company’s Quarterly Report on Form 10-Q (No. 001-13459), filed November7, 2016)4.1Specimen certificate for shares of common stock of the Registrant*4.2Amended and Restated Declaration of Trust of AMG Capital Trust II, dated as of October 17, 2007, by and among Affiliated ManagersGroup, Inc., U.S. Bank National Association, successor in interest to Bank of America National Trust Delaware, successor by merger to LaSalleNational Trust Delaware, as Delaware Trustee, U.S. Bank National Association, successor in interest to Bank of America, N.A., successor bymerger to LaSalle Bank National Association, as Property Trustee and Institutional Administrator, and the holders from time to time ofundivided beneficial interests in the assets of AMG Capital Trust II (incorporated by reference to the Company’s Current Report on Form 8-K(No. 001-13459), filed October 18, 2007)4.3Indenture, dated as of October 17, 2007, by and between Affiliated Managers Group, Inc. and U.S. Bank National Association, successor ininterest to Bank of America, N.A., successor by merger to LaSalle Bank National Association, as Debenture Trustee (incorporated by referenceto the Company’s Current Report on Form 8-K (No. 001-13459), filed October 18, 2007)4.4First Supplemental Indenture, dated as of January 10, 2014, by and between Affiliated Managers Group, Inc. and U.S. Bank NationalAssociation, successor in interest to Bank of America, N.A., successor by merger to LaSalle Bank National Association, as Debenture Trustee(incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (No. 001-13459), filedFebruary 27, 2014)4.5Guarantee Agreement, dated as of October 17, 2007, by and between Affiliated Managers Group, Inc. and U.S. Bank National Association,successor in interest to Bank of America, N.A., successor by merger to LaSalle Bank National Association, as Guarantee Trustee (incorporatedby reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed October 18, 2007)4.6Indenture, dated as of February 11, 2014, by and between Affiliated Managers Group, Inc. and U.S. Bank National Association, as Trustee(incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed February 11, 2014)4.7Supplemental Indenture related to the 4.250% Senior Notes due 2024, dated as of February 11, 2014, by and between Affiliated ManagersGroup, Inc. and U.S. Bank National Association, as Trustee, including the form of Global Note attached as Annex A thereto (incorporated byreference to the Company’s Current Report on Form 8-K (No. 001-13459), filed February 11, 2014)4.8Second Supplemental Indenture related to the 3.500% Senior Notes due 2025, dated as of February 13, 2015, by and between AffiliatedManagers Group, Inc. and U.S. Bank National Association, as Trustee, including the form of Global Note attached as Annex A thereto(incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed February 13, 2015)10.1†Affiliated Managers Group, Inc. Defined Contribution Plan (incorporated by reference to the Company’s Annual Report on Form 10-K for thefiscal year ended December 31, 1999 (No. 001-13459), filed March 30, 2000)10.2†Affiliated Managers Group, Inc. Executive Incentive Plan (incorporated by reference to the Company’s Proxy Statement on Schedule 14A(No. 001-13459), filed April 29, 2015)10.3†Affiliated Managers Group, Inc. Amended and Restated 1997 Stock Option and Incentive Plan (incorporated by reference to the Company’sQuarterly Report on Form 10-Q (No. 001-13459), filed May 10, 2004)10.4†Affiliated Managers Group, Inc. Amended and Restated 2002 Stock Option and Incentive Plan (incorporated by reference to the Company’sQuarterly Report on Form 10-Q (No. 001-13459), filed May 10, 2004)10.5†Affiliated Managers Group, Inc. 2006 Stock Option and Incentive Plan (incorporated by reference to the Company’s Proxy Statement onSchedule 14A (No. 001-13459), filed April 28, 2006)10.6†Affiliated Managers Group, Inc. Amended and Restated Long-Term Stock and Investment Plan (incorporated by reference to the Company’sAnnual Report on Form 10-K for the fiscal year ended December 31, 2013 (No. 001-13459), filed February 27, 2014)10.7†Affiliated Managers Group, Inc. Executive Retention Plan (incorporated by reference to the Company’s Quarterly Report on Form 10-Q (No.001-13459), filed November 9, 2005)10.8†Affiliated Managers Group, Inc. Deferred Compensation Plan (incorporated by reference to the Company’s Annual Report on Form 10-K for thefiscal year ended December 31, 2008 (No. 001-13459), filed March 2, 2009)76Table of Contents10.9†Affiliated Managers Group, Inc. Long-Term Equity Interests Plan 2010, LP (incorporated by reference to the Company’s Current Report onForm 8-K (No. 001-13459), filed December 17, 2010)10.10†Affiliated Managers Group, Inc. 2011 Stock Option and Incentive Plan (incorporated by reference to the Company’s Proxy Statement onSchedule 14A (No. 001-13459), filed April 19, 2011)10.11†Affiliated Managers Group, Inc. Long-Term Equity Interests Plan 2011, LP (incorporated by reference to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2011 (No. 001-13459), filed February 23, 2012)10.12†Affiliated Managers Group, Inc. Long-Term Equity Interests Plan, LP (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (No. 001-13459), filed February 22, 2013)10.13†Affiliated Managers Group, Inc. 2013 Incentive Stock Award Plan (incorporated by reference to the Company’s Proxy Statement on Schedule14A (No. 001-13459), filed April 30, 2013)10.14†Form of Restricted Stock Award Agreement pursuant to Affiliated Managers Group, Inc. 2013 Incentive Stock Award Plan (incorporated byreference to the Company’s Quarterly Report on Form 10-Q (No. 001-13459), filed November 12, 2013)10.15†Form of Restricted Stock Unit Award Agreement pursuant to Affiliated Managers Group, Inc. 2013 Incentive Stock Award Plan (incorporatedby reference to the Company’s Annual Report on Form 10-K (No. 001-13459), filed February 24, 2017)10.16†Form of Stock Option Agreement pursuant to Affiliated Managers Group, Inc. Stock Option and Incentive Plan (incorporated by reference tothe Company’s Quarterly Report on Form 10-Q (No. 001-13459), filed August 5, 2016)10.17†Form of Affiliated Managers Group, Inc. Award Agreement (incorporated by reference to the Company’s Annual Report on Form 10-K for thefiscal year ended December 31, 2013 (No. 001-13459), filed February 27, 2014)10.18†Form of Indemnification Agreement entered into by each Director and Executive Officer (incorporated by reference to the Company’s AnnualReport on Form 10-K for the fiscal year ended December 31, 2010 (No. 001-13459), filed March 1, 2011)10.19†Service Agreement, dated as of December 6, 2016, by and between Affiliated Managers Group, Inc. and Hugh P. B. Cutler*10.20Credit Agreement, dated as of September 22, 2015, among Affiliated Managers Group, Inc., Bank of America, N.A., and the several banks andother financial institutions from time to time party thereto as lenders, and the exhibits and schedules thereto (incorporated by reference to theCompany’s Current Report on Form 8-K (No. 001-13459), filed September 22, 2015)10.21Commitments Increase and Joinder Agreement, dated as of June 3, 2016, among Affiliated Managers Group, Inc., Bank of America, N.A., andcertain lenders party thereto (incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed June 6, 2016) 10.22Term Credit Agreement, dated as of September 22, 2015, among Affiliated Managers Group, Inc., Bank of America, N.A., and the several banksand other financial institutions from time to time party thereto as lenders, and the exhibits and schedules thereto (incorporated by reference tothe Company’s Current Report on Form 8-K (No. 001-13459), filed September 22, 2015)10.23Commitment Increase Agreement, dated as of June 3, 2016, among Affiliated Managers Group, Inc., Bank of America, N.A., and certain lendersparty thereto (incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed June 6, 2016)10.24Form of Equity Distribution Agreement, dated as of August 16, 2016 (incorporated by reference to the Company’s Current Report on Form 8-K(No. 001-13459), filed August 17, 2016)10.25Form of Master Confirmation Letter Agreement, dated as of August 16, 2016 (incorporated by reference to the Company’s Current Report onForm 8-K (No. 001-13459), filed August 17, 2016)21.1Schedule of Subsidiaries*23.1Consent of PricewaterhouseCoopers LLP*31.1Certification of Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002*31.2Certification of Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002*32.1Certification of Registrant’s Chief Executive Officer pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002**32.2Certification of Registrant’s Chief Financial Officer pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002**101The following financial statements from the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 are filedherewith, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income for the years endedDecember 31, 2017, 2016, and 2015, (ii) the Consolidated Balance Sheets at December 31, 2017 and December 31, 2016, (iii) the ConsolidatedStatement of Equity for the years ended December 31, 2017, 2016, and 2015, (iv) the Consolidated Statements of Cash Flows for the yearsended December 31, 2017, 2016, and 2015, and (v) the Notes to the Consolidated Financial Statements. † Indicates a management contract or compensatory plan* Filed herewith** Furnished herewith77Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. AFFILIATED MANAGERS GROUP, INC.(Registrant)Date: February 23, 2018 By:/s/ SEAN M. HEALEY Sean M. HealeyChief Executive Officer and Chairman of theBoard of DirectorsPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated.Signature Title Date /s/ SEAN M. HEALEY Chief Executive Officer andChairman of the Board of Directors(Principal Executive Officer) February 23, 2018Sean M. Healey /s/ JAY C. HORGEN Chief Financial Officer and Treasurer(Principal Financial and PrincipalAccounting Officer) February 23, 2018Jay C. Horgen /s/ SAMUEL T. BYRNE Director February 23, 2018Samuel T. Byrne /s/ DWIGHT D. CHURCHILL Director February 23, 2018Dwight D. Churchill /s/ GLENN EARLE Director February 23, 2018Glenn Earle /s/ NIALL FERGUSON Director February 23, 2018Niall Ferguson /s/ TRACY P. PALANDJIAN Director February 23, 2018Tracy P. Palandjian /s/ PATRICK T. RYAN Director February 23, 2018Patrick T. Ryan /s/ KAREN L. YERBURGH Director February 23, 2018Karen L. Yerburgh /s/ JIDE J. ZEITLIN Director February 23, 2018Jide J. Zeitlin 78THIS CERTIFIES THAT is the owner of CUSIP DATED COUNTERSIGNED AND REGISTERED: COMPUTERSHARE TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF Affiliated Managers Group, Inc. transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be subject to all of the provisions of the Articles of Incorporation and Bylaws of the Corporation, each as from time to time amended, to all of which the holder by acceptance hereof assents. This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. COMMON STOCK PAR VALUE $.01 COMMON STOCK SEE REVERSE FOR CERTAIN DEFINITIONS Certificate Number Shares AFFILIATED MANAGERS GROUP, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE Executive Vice President, General Counsel and Secretary Chief Financial Officer and Treasurer By AUTHORIZED SIGNATURE Dec. 29, 1993 DELAWAREA FF IL IA TE D MA NAGERS GRO U P,IN C . THIS CERTIFICATE IS TRANSFERABLE IN CANTON, MA, JERSEY CITY, NJ AND COLLEGE STATION, TX008252 10 8 DD-MMM-YYYY * * 0 0 0 0 0 0 * * * * * * * * * * * * * * * * * * * * * 0 0 0 0 0 0 * * * * * * * * * * * * * * * ** * * * * 0 0 0 0 0 0 * * * * * * * * * * * * * * * * * * * * * 0 0 0 0 0 0 * * * * * * * * * * * * * * * * * * * * 0 0 0 0 0 0 * * * * * * * * * * * * * 123456 123456 Num/No .Denom . Total 1234567 NAME SAMPL E DESIGNATION (IF ANY ) ADD 1 ADD 2 ADD 3 ADD 4 CUSI P Holder ID Insurance Value Number of Share sDT C Certificate Number s 1234567890/123456789 0 1234567890/123456789 0 1234567890/123456789 0 1234567890/123456789 0 1234567890/123456789 0 1234567890/123456789 0 Total Transactio n XXXXXX XX X XXXXXXXXX X 1,000,000.0 0 12345 6 12345678 12345678901234 5 Exhibit 4.1 The IRS requires that the named transfer agent (“we”) report the cost basis of certain shares or units acquired after January 1, 2011. If your shares or units are covered by the legislation, and you requested to sell or transfer the shares or units using a specific cost basis calculation method, then we have processed as you requested. If you did not specify a cost basis calculation method, then we have defaulted to the first in, first out (FIFO) method. Please consult your tax advisor if you need additional information about cost basis. If you do not keep in contact with the issuer or do not have any activity in your account for the time period specified by state law, your property may become subject to state unclaimed property laws and transferred to the appropriate state. For value received, ____________________________hereby sell, assign and transfer unto ________________________________________________________________________________________________________________________________ ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________________ Shares _______________________________________________________________________________________________________________________ Attorney Dated: __________________________________________20__________________ Signature: ____________________________________________________________ Signature: ____________________________________________________________ Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) of the common stock represented by the within Certificate, and do hereby irrevocablyconstitute and appoint to transfer the said stock on the books of the within-named Incorporation with full power of substitution in the premises. . AFFILIATED MANAGERS GROUP, INC. THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OF THE CORPORATION, AND THE QUALIFICATIONS, LIMITATIONS, OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. THE CORPORATION WILL ALSO FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS A DESCRIPTION OF THE AUTHORITY OF THE CORPORATION'S BOARD OF DIRECTORS TO SET THE RELATIVE RIGHTS AND PREFERENCES OF UNISSUED SERIES OF THE CORPORATION'S CAPITAL STOCK. SUCH REQUESTS MAY BE MADE TO THE CORPORATION AT ITS PRINCIPAL OFFICE OR THE TRANSFER AGENT. Signature(s) Guaranteed: Medallion Guarantee Stamp THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEEMEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT -............................................Custodian ................................................ (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to Minors Act......................................................... (State) JT TEN - as joint tenants with right of survivorship UNIF TRF MIN ACT -............................................Custodian (until age ................................) and not as tenants in common (Cust) .............................under Uniform Transfers to Minors Act ................... (Minor) (State) Additional abbreviations may also be used though not in the above list. Exhibit 10.19 6 December 2016HUGH P. B. CUTLERAFFILIATED MANAGERS GROUP LIMITEDSERVICE AGREEMENT THIS AGREEMENT is made on 6 December 2016BETWEEN(1) AFFILIATED MANAGERS GROUP LIMITED which has its registered office at 35 Park Lane, London W1K 1RB (theCompany); and(2) HUGH P. B. CUTLER (the Employee)IT IS AGREED as follows:1. DefinitionsIn this Agreement the following expressions have the following meanings:AMG means Affiliated Managers Group, Inc., the parent company of the Company;Confidential Information means any confidential information received or acquired by the Employee from the Company or any GroupCompany or any of its or their partners, members, directors, employees, affiliates, customers or clients in pursuance of the Employee’sduties under this Agreement; which the Employee knew or ought reasonably to have known to be confidential concerning the businessor affairs of (a) the Company, (b) any Group Company or (c) any of its or their partners, members, directors, employees, affiliates,customers or clients, including but not limited to information regarding current or proposed businesses, technologies, businessrelationships, clients, personnel, processes, operations, strategies, plans, methods, investment recommendations, investment processes, investment methodologies, products, confidential records, manuals, data, client and contact lists, trade secrets or financial, corporate,marketing or personnel affairs, portfolio investments or mandates, or potential portfolio investments or mandates, and lists andinformation concerning actual or possible investors in an entity managed, proposed to be managed or advised by the Company or anyGroup Company, and all non-public, competitively or technically valuable information and all memoranda, notes, papers, items andtangible media related to the foregoing;Effective Date means 1 March 2017;Employment means the Employee’s employment in accordance with the terms and conditions of this Agreement;Group Company means AMG or any holding company (as defined in the Companies Act 2006) or subsidiary (as defined in theCompanies Act 2006) of AMG or any subsidiary of any such holding company or any other company or limited liability partnership orpartnership or similar entity in which AMG or any holding company or subsidiary of AMG directly or indirectly holds an ownershipinterest and Group will be construed accordingly; andProspective Client means any person, firm, company or entity with whom the Company or any Group Company was at any timeduring the period of 12 months immediately prior to the Termination Date negotiating with for the supply of goods or services by theCompany or any Group Company or to whom the Company or any Group Company had at any time during the period of 12 monthsimmediately prior to the Termination Date pitched for the supply of goods or services by the Company or any Group Company.2. Term and Job Description2.1 The Employee shall be employed as Head of Global Distribution.2.2 The Employment shall begin on the Effective Date. The Employee’s period of continuous employment for all statutory purposeswill also begin on the Effective Date.2.3 Subject to clause 13, the Employment will continue until terminated by either party giving to the other six months’ written notice.3. Duties3.1 The Employee will be responsible for the growth and development of the Group’s shared distribution platforms around the worldthrough enhancing (and without disrupting) the Group’s established relationship management model, including:(a) shaping and delivering a highly commercial, productive, and profitable distribution platform, function, and team for AMG and itsAffiliates, across:(i) existing institutional sales platforms;(ii) holding company support efforts in operational and product areas; and(iii) existing retail sales platforms;(b) positioning these platforms for continued growth , including especially through strategic client management, growth, anddevelopment, with full responsibility for sales, servicing, and marketing - as well as leading the development of, and executionof, future distribution platforms (both institutional and retail);(c) leading the development of shared cross-Affiliate product and distribution initiatives; and(d)representing AMG well in the marketplace with key stakeholders, including current and future Affiliates, clients, regulators, themedia, and industry groups.3.2 The Employee shall also perform such other duties consistent with the Employee’s position as may be assigned to him by theCompany from time to time.3.3 The Employee will dually report to the Group’s Chairman and Chief Executive Officer and the President and Chief OperatingOfficer in relation to his management responsibilities (although the Employee acknowledges and agrees that reporting lines mayreasonably be changed by AMG from time to time). 3.4 The Employee’s working hours shall be such hours as may be necessary to properly perform the Employee’s duties.3.5 The Employee agrees, in accordance with Regulation 5 of the Working Time Regulations 1998 (the Regulations), that theprovisions of Regulation 4(1) do not apply to him, and that the Employee shall give the Company three months’ notice in writing if theEmployee wishes Regulation 4(1) to apply to him.3.6 The Employee will be based in the Company’s principal UK office or such other location at which the Company may from timeto time require, although it is expected that he will be required to travel and work globally as necessary or appropriate for the properperformance of the Employee’s duties under the Employment. 3.7 The Employee agrees to act in accordance with all applicable laws and regulatory requirements, both in and outside the UK.4. Salary4.1 The Employee’s initial salary is $325,000 (which will be paid in GBP based on a spot FX rate to be determined upon joining,less any required deductions) on an annualized basis. The salary will be reviewed annually during the Employment, with the firstreview expected to take place at 2017 calendar year-end. No salary reviewwill be undertaken after notice has been given by either party to terminate the Employment. The Company is under no obligation toincrease the Employee’s salary following a salary review, but will not decrease it.4.2 The Employee’s salary will accrue on a daily basis, and will be payable in advance in equal monthly instalments.4.3 The Employee agrees that, pursuant to Part II of the Employment Rights Act 1996, the Company has the right to deduct from theEmployee’s salary and/or bonus any amount owed to the Company or any Group Company by the Employee.5. Discretionary Annual Bonus5.1 The Employee is eligible to participate in the Company’s discretionary bonus plan but, except as set out in clause 5.3, theEmployee has no contractual entitlement to receive any bonus.5.2 The factors that will be taken into account in determining whether to award the Employee a discretionary bonus, and if so inwhat amount, may include, but will not be limited to, the Company’s financial performance as a whole, the Company’s need to retainthe Employee in employment and the Employee’s individual performance. The Employee’s individual performance will be assessed byreference both to financial performance and performance in meeting any other objectives set by the Company, including mutuallyagreeable key performance indicators (KPIs), which will be set by the Employee and the Company within three months of theEffective Date, and within three months of the beginning of each calendar year thereafter. The satisfactory achievement of these KPIswill be one of the factors used to assess the Employee’s individual performance each year.5.3 For the calendar year 2017, and subject to clause 5.4, the Employee will be paid a minimum guaranteed cash bonus of $800,000(which will be paid in GBP based on a spot FX rate to be determined at time of payment, less any required deductions). Additionally,for the calendar year 2017, and subject to clause 5.4, the Employee will be eligible to receive an equity award under the Company’sequity compensation program, which will have a minimum fair value of $1,125,000 at the time of grant, and will be subject tocustomary vesting and other terms under the Company’s equity compensation program and plans, including confidentiality, non-competition and non-solicitation provisions.5.4 The Employee will only be eligible to receive payment of any discretionary bonus and payment of the awards set forth in clause5.3 if he is in the Company’s employment at the date of payment (which will normally be in February of the year following the year inwhich the bonus relates) and he has not given or received notice to terminate his employment in accordance with clause 2 or clause 13of this Agreement or otherwise. 5.5 Payment of a bonus or equity award in any year does not give rise to any obligation on the Company to make a payment orequity award in any subsequent or future year.6. Make-whole Awards6.1 Subject to clause 6.2, as a make-whole on the equity the Employee will forgo at his current employer, upon the Employee joiningthe Company, AMG will grant the Employee a cash award of $250,000 (which will be paid in GBP based on a spot FX rate to bedetermined at time of payment, less any required deductions) and a restricted stock unit award under the Company’s equitycompensation program, which will have a fair value of $250,000 at the time of grant, which will fully vest upon grant. Additionally,upon joining, the Employee will be awarded a restricted stock unit award with a fair value of $1,000,000 which will vest at a rate of25% on each of January 1, 2018, January 1, 2019, January 1, 2020 and January 1, 2021. The terms of the equity grants will bedocumented in award agreements consistent with our equity compensation programs and plans, including confidentiality, non-competition and non-solicitation provisions.6.2 The Employee will only be entitled to receive vesting of the awards if the Employee is in the Company’s employment at eachrelevant vesting date and has not given or received notice to terminate his employment in accordance with clause 2.3 or clause 13 ofthis Agreement or otherwise.7. Expenses7.1 The Company will reimburse (or procure the reimbursement of) all out-of-pocket expenses properly and reasonably incurred bythe Employee in the course of the Employment subject to production of receipts or other appropriate evidence of payment, inaccordance with the Company’s policies from time to time in force.8. Benefits; Compensation Structure Generally8.1 The Company will provide a set of benefits for which the Employee will be eligible.8.2 Subject to clause 8.3, such benefits shall include health insurance, life insurance, long-term disability, travel insurance andpension plan benefits (in accordance with Part 1 of the Pensions Act 2008). 8.3 The compensation and benefits structure may be adjusted from time to time (including adjustments to amounts and rates, timingsof payment and types of benefits offered), at the Company’s absolute discretion.9. Holiday9.1 The Employee is entitled to 25 working days’ paid holiday (on an annualized basis) per calendar year during the Employment (inaddition to public holidays in England), to be taken at a time or times convenient to the Company. The right to paid holiday will accruepro-rata during each calendar year of the Employment, and the Employee’s amount of paid holiday will be pro-rated for partialcalendar years.9.2 Up to a maximum of 5 days’ accrued but untaken holiday may be carried forward to the next calendar year. Subject to clause 9.3the Employee has no entitlement to be paid in lieu of accrued but untaken holiday.9.3 On termination of the Employment, the Employee’s entitlement to accrued holiday pay shall be calculated on a pro-rata basis(which calculation shall be made on the basis that each day of paid holiday is equivalent to 1/260 of the Employee’s salary). If theEmployee has taken more holiday than the Employee’s accrued entitlement, the Company is authorised to deduct the appropriateamount from the Employee’s final salary instalment (which deduction shall be made on the basis that each day of paid holiday isequivalent to 1/260 of the Employee’s salary.)10. Sickness and Other Incapacity10.1 Subject to the Employee’s compliance with the Company’s policy on notification and certification of periods of absence fromwork, the Employee will continue to be paid the Employee’s full salary during any period of absence from work due to sickness, injuryor other incapacity, up to a maximum of 12 weeks in aggregate (or such longer period as necessary for insurance coverage under theCompany’s policies to begin, and provided that such period does not exceed 26 weeks) in any period of 52 consecutive weeks. Suchpayment will be inclusive of any statutory sick pay payable in accordance with applicable legislation in force at the time of absence.10.2 The Employee will not be paid during any period of absence from work (other than due to holiday, sickness, injury or otherincapacity) without the prior permission of the Company.11. Other Interests11.1 During the Employment the Employee will not (without the Company’s prior written consent) be directly or indirectly engaged,concerned or interested in any other business activity, trade or occupation. Consent given in accordance with this clause may bewithdrawn at any time.12. Disciplinary and Grievance Procedures12.1 Details of the Company’s disciplinary and grievance procedures are available upon request. These procedures do not form partof the Employee’s contract of employment.13. Termination13.1 Either party may terminate the Employment in accordance with clause 2.3.13.2 The Company may, in its sole discretion, terminate the Employment at any time with immediate effect and pay a sum in lieu ofnotice (the Payment in Lieu). The Payment in Lieu shall be equal to:(a) the basic salary which the Employee would have been entitled to receive under this Agreement during the notice period referredto in clause 2.3 if notice had been given (or, if notice has already been given, during the remainder of the notice period) (theRelevant Period); and(b) any employer contributions in respect of insurances and pension contributions provided pursuant to clause 8 which theEmployee would have been entitled to receive for the Relevant Period.For the avoidance of doubt, the Employee will not be entitled to receive any payment in addition to the Payment in Lieu in respect of(i) any holiday entitlement that would have accrued during the Relevant Period; or (ii) any bonus payment that might otherwise havebeen due during the Relevant Period.The Payment in Lieu shall be subject to such deductions as may be required by law.13.3 The Company may also terminate the Employment immediately and with no liability to make any further payment to theEmployee (other than in respect of amounts accrued due at the date of termination) if the Employee:(a) commits any serious or (after warning) repeated breach of any material obligation under this Agreement or the Employment;(b) is guilty of serious misconduct which, in the Company’s reasonable opinion, has damaged or may damage the business oraffairs of the Company or any other Group Company;(c) is guilty of conduct which, in the Company’s reasonable opinion, brings or is likely to bring the Employee, the Company or anyother Group Company into disrepute;(d) is convicted of a criminal offence (other than a road traffic offence not subject to a custodial sentence);(e) is disqualified from acting as a director of a company by order of a competent court; or(f) is declared bankrupt or makes any arrangement with or for the benefit of the Employee’s creditors or an administration order ismade against the Employee under the County Courts Act 1984.This clause shall not restrict any other right the Company may have (whether at common law or otherwise) to terminate theEmployment summarily. Any delay by the Company in exercising its rights under this clause shall not constitute a waiver of those rights.13.4 On termination of the Employment for whatever reason (and whether in breach of contract or otherwise) the Employee will:(a) immediately deliver to the Company all books, documents, papers, computer records, computer data, credit cards, apparatus,equipment and any other property relating to the business of or belonging to the Company or any other Group Company whichis in the Employee’s possession or under the Employee’s control. The Employee is not entitled to retain copies orreproductions of any documents, papers or computer records relating to the business of or belonging to the Company or anyother Group Company; and(b) immediately pay to the Company or, as the case may be, any other Group Company all outstanding loans or other amounts dueor owed to the Company or any Group Company. The Employee confirms that, should he fail to do so, the Company is to betreated as authorised to deduct from any amounts due or owed to the Employee by the Company (or any other GroupCompany) a sum equal to such amounts.13.5 The Employee will not at any time after termination of the Employment represent himself as being in any way concerned withor interested in the business of, or employed by, the Company or any other Group Company.13.6 Upon any termination of employment, the Employee will be terminated from any and all offices, positions and directorshipswith the Company and any of its Group Companies, and agrees to execute any documents to effect such terminations.14. Suspension and gardening leave14.1 Where notice of termination has been served by either party whether in accordance with clause 2.3 or otherwise, the Companyshall be under no obligation to provide the Employee with any activities to carry out on behalf of the Company or any GroupCompany for the whole or any part of the relevant notice period and may require the Employee:(a) not to attend any premises of the Company or any other Group Company;(b) to resign with immediate effect from any offices the Employee holds with the Company or any Group Company;(c) to refrain from business contact with any customers, clients or employees of the Company or any Group Company; and/or(d) to take any holiday which has accrued under clause 9 during any period of suspension under this clause 14.1.The provisions of clause 11 shall remain in full force and effect during any period of suspension under this clause 14.1. The Employeewill also continue to be bound by duties of good faith and fidelity to the Company during any period of suspension under thisclause14.1. Any suspension under this clause 14.114.1 shall be on full salary and benefits (save that the Employee shall not be entitledto earn or be paid any bonus during any period of suspension).14.2 The Company may suspend the Employee from the Employment during any period in which the Company is carrying out adisciplinary investigation into any alleged acts or defaults of the Employee. Such suspension shall be on full salary and benefits (savethat the Employee shall not be entitled to earn or be paid any bonus during any period of suspension, unless such investigation does notresult in any adverse findings and so long as the Company reinstates the Employee following such suspension on the sameemployment terms in effect at the time of suspension).15. Restraint on Activities of Employee and Confidentiality15.1 The Employee will keep secret and will not at any time (whether during the Employment or thereafter) use for the Employee’sor another’s advantage, or reveal to any person, firm, company or organisation, and shall use the Employee’s best endeavours toprevent the publication or disclosure of, any Confidential Information.The restrictions in this clause shall not apply:(a) to any disclosure of information which is already in the public domain otherwise than by breach of this Agreement;(b) to any disclosure of information which was known to, or in the possession of, the Employee prior to his receipt of suchinformation from the Company or any Group Company whenever so received;(c) to any disclosure of information which has been conceived or generated by the Employee independently of any information ormaterials received or acquired by the Employee from the Company or any Group Company;(d) to any disclosure or use authorised by the Company or required by the Employment or by any applicable laws or regulations,provided that the Employee promptly notifies the Company when any such disclosure requirement arises to enable theCompany to take such action as it deems necessary, including, without limitation, to seek an appropriate protective order and/ormake known to the appropriate government or regulatory authority or court the proprietary nature of the ConfidentialInformation and make any applicable claim of confidentiality with respect hereto;(e) so as to prevent the Employee from using his own personal skill, experience and knowledge in any business in which theEmployee may be lawfully engaged after the Employment is ended, so long as this use is consistent with the Employee’scontinuing obligations and duties to the Company, including without limitation those set forth in this Agreement; or(f) to (i) prevent the Employee making a protected disclosure within the meaning of s43A of the Employment Rights Act 1996 or(ii) preclude or impede the Employee from cooperating with any governmental or regulatory entity or agency in anyinvestigation, or from communicating any suspected wrongdoing or violation of law to any such entity or agency, including,but not limited to, reporting pursuant to the “whistleblower rules” promulgated by the U.S. Securities and ExchangeCommission, or require the Employee to obtain the Company’s prior written consent in connection therewith.16. Post-termination covenants16.1 For the purposes of clause 16 the term “Termination Date” shall mean the date of the termination of the Employmenthowsoever caused (including, without limitation, termination by the Company which is in repudiatory breach of this Agreement).16.2 The Employee covenants with the Company (for itself and as trustee and agent for each other Group Company) that theEmployee shall not, whether directly or indirectly, on the Employee’s behalf or on behalf of or in conjunction with any other person,firm, company or other entity:(a) for the period of (subject to clause 16.3) 12 months following the Termination Date, solicit or entice away or endeavour tosolicit or entice away from the Company or any Group Company any person, firm, company or other entity who is, or was, inthe 12 months immediately prior to the Termination Date, a client or Prospective Client of the Company or any GroupCompany with whom the Employee had business dealings during the course of the Employment in that 12-month period, orhad active knowledge of as a result ofthe Employment. Nothing in this clause 16.2(a) shall prohibit the seeking or doing of business not in direct or indirectcompetition with the business of the Company or any Group Company;(b) for the period of (subject to clause 16.3) 12 months following the Termination Date, have any business dealings with or interferewith in any way any person, firm, company or other entity who is, or was, in the 12 months immediately prior to theTermination Date, a client or Prospective Client of the Company or any Group Company with whom the Employee hadbusiness dealings during the course of the Employment in that 12-month period, or had active knowledge of as a result of theEmployment. Nothing in this clause 16.2(b) shall prohibit the seeking or doing of business not in direct or indirect competitionwith the business of the Company;(c) for the period of (subject to clause 16.3) 12 months following the Termination Date, solicit or entice away or endeavour tosolicit or entice away any individual who is employed or engaged by the Company or any Group Company as an officer atVice President level or above, a principal or partner or a sales and marketing or portfolio-management employee and withwhom the Employee had business dealings during the course of the Employment in the 12-month period immediately prior tothe Termination Date, or had active knowledge of as a result of the Employment; and(d) for the period of (subject to clause 16.3) 12 months following the Termination Date, directly or indirectly, whether as owner,partner, shareholder, member, consultant, agent, employee, co-venturer or otherwise, engage, participate or invest in anyCompeting Business (as hereinafter defined). Furthermore, and not by way of limitation of the foregoing, the Employee willnot, directly or indirectly, take any action to negotiate or discuss with any person or entity or solicit or entertain from any personor entity, any investment, purchase, proposal, offer or indication of interest regarding (A) any investment in any entity in whichthe Company or any Group Company holds any securities or other investment interests or (B) any investment in any otherentity with whom the Company or an Group Company is or was discussing or negotiating any possible investment therein atany time during the one (1) year preceding the termination (if any) of the Employee’s Employment (or other applicable servicerelationship) with the Company or any Group Company. For purposes of this Agreement, the term “Competing Business”shall mean a business or a division of a business, conducted anywhere in the world, which invests in or acquires boutique orspecialist investment managers or advisers, or has adopted a strategy or developed a business plan to invest in or acquiremultiple boutique or specialist investment managers or advisers. The provisions of this clause 16.2(d) shall not, at any timefollowing the Termination Date, prohibit the Employee from owning up to five percent (5%) of the outstanding stock of apublicly held corporation which constitutes or is affiliated with a Competing Business. 16.3 The period during which the restrictions referred to in clause 16.2 shall apply following the Termination Date and shall bereduced by the amount of time during which, if at all, the Company suspends the Employee under the provisions of clause 14.1.16.4 The Employee agrees that if, during either the Employment or the period of the restrictions set out in clause 16.2, the Employeereceives an offer of employment or engagement, the Employee will provide a copy of clause 16.2 to the offeror as soon as isreasonably practicable after receiving the offer.17. Waiver of Rights17.1 If the Employment is terminated by either party and the Employee is offered re-employment by the Company (or employmentwith another Group Company) on terms no less favourable in all material respects than the terms of the Employment under thisAgreement, the Employee shall have no claim against the Company in respect of such termination.18. Contracts (rights of third parties) act 199918.1 Subject to clause 18.2, a person who is not a party to this Agreement shall have no right under the Contracts (Rights of ThirdParties) Act 1999 to enforce any of its terms.18.2 AMG shall have the right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of the terms of this Agreementas if it were a party to this Agreement.19. Miscellaneous19.1 This Agreement, together with any other documents referred to in this Agreement, constitutes the entire agreement andunderstanding between the parties, and supersedes all other agreements both oral and in writing between the Company and theEmployee. The Employee acknowledges that he has not entered into this Agreement in reliance upon any representation, warranty orundertaking which is not set out in this Agreement or expressly referred to in it as forming part of the Employee’s contract ofemployment.19.2 The Employee represents and warrants to the Company that he will not by reason of entering into the Employment, or byperforming any duties under this Agreement, be in breach of any terms of employment with a third party whether express or implied orof any other obligation binding on the Employee. The Employee further agrees that he is not subject to or involved in any litigation,complaints, regulatory investigations, inquiries or other matters, or any other obligations that could affect his ability to perform hisduties for the Company commencing on the Effective Date.19.3 Any notice to be given under this Agreement to the Employee may be provided by email or served by being handed to theEmployee personally or by being sent by recorded delivery first class post to the Employee at the Employee’s usual or last knownaddress; and any notice to be given to the Company may be served by being left at or by being sent by recorded delivery first class postto its registered office for the time being. Any notice served by post shall be deemed to have been served on the day (excludingSundays and public and bank holidays) next following the date of posting and in proving such service it shall be sufficient proof thatthe envelope containing the notice was properly addressed and posted as a prepaid letter by recorded delivery first class post.19.4 This agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales.19.5 Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute orclaim arising out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes orclaims).SIGNED by )/s/ Hugh P. B. CutlerHUGH P. B. CUTLER ) SIGNED by )/s/ Peter MacEwenPETER MACEWEN )For and on behalf ofthe COMPANY QuickLinks Exhibit 10.19Exhibit 21.1 SCHEDULE OF SUBSIDIARIES(in alphabetical order) Below is a list comprised of (i) wholly-owned subsidiaries of Affiliated Managers Group, Inc. (the “Company”), (ii) entities in which the Company has amajority interest (direct and indirect) and (iii) entities in which the Company has a minority investment (direct and indirect), as of December 31, 2017. Minority investments are indicated via asterisk (*). 216 Acquisition, LLC, a Delaware limited liability company4444582 Canada Inc., a Canada corporationAbacos Atlantic Holdings Ltd., a Bahamas international business companyAbax Investments Proprietary Limited, a limited liability private company incorporated in South Africa*Affiliated Managers Group (Hong Kong) Limited, a limited company incorporated in Hong KongAffiliated Managers Group Limited, a limited company incorporated in the United KingdomAffiliated Managers Group Pty Ltd, a limited company incorporated in AustraliaAffiliated Managers Group (Switzerland) AG, a company incorporated in SwitzerlandAKH Holdings LLC, a Delaware limited liability companyAMG 2014 Capital LLC, a Delaware limited liability companyAMG Arrow Holdings Ltd., a Bahamas international business companyAMG Atlantic Holdings Ltd., a Bahamas international business companyAMG Boston Holdings, LLC, a Delaware limited liability companyAMG CA Holdings Corp., a New Jersey corporationAMG CA Holdings, LLC, a Delaware limited liability companyAMG CA Holdings LP, a Delaware limited partnershipAMG Canada Corp., a Nova Scotia corporationAMG Canada Holdings LLC, a Delaware limited liability companyAMG Cipher Holdings, LLC, a Delaware limited liability companyAMG Conception Holdings 1 Ltd., a Bahamas international business companyAMG Conception Holdings 3 Ltd., a Bahamas international business companyAMG CVC Holdings LLC, a Delaware limited liability companyAMG Distributors, Inc., a Delaware corporationAMG Edison Holdings, LLC, a Delaware limited liability companyAMG FCMC Holdings, LLC, a Delaware limited liability companyAMG Funds LLC, a Delaware limited liability companyAMG Gamma Holdings Ltd., a Bahamas international business companyAMG Gamma Holdings 2 Ltd., a Bahamas international business companyAMG Genesis, LLC, a Delaware limited liability companyAMG Global, Inc., a Delaware corporationAMG Gotham Holdings, LLC, a Delaware limited liability companyAMG GWK Holdings, LLC, a Delaware limited liability companyAMG New York Holdings Corp., a Delaware corporationAMG Northeast Holdings, Inc., a Delaware corporationAMG Northeast Investment Corp., a Delaware corporationAMG PA Holdings Partnership, a Delaware general partnershipAMG PFM Holdings LP, a Delaware limited partnershipAMG Plymouth UK Holdings (1) Limited, a limited company incorporated in England and WalesAMG Properties LLC, a Delaware limited liability companyAMG Renaissance Holdings LLC, a Delaware limited liability companyAMG SA Holdings Proprietary Limited, a limited liability private company incorporated in South AfricaAMG SIGPL Holdings LLC, a Delaware limited liability companyAMG SSAM Holdings, LLC, a Delaware limited liability companyAMG TBC, LLC, a Delaware limited liability companyAMG UK Holdings Ltd., a Bahamas international business companyAMG Wealth Partners, LP, a Delaware limited partnershipAMG WF Holdings LLC, a Delaware limited liability companyAMG Windermere Holdings Ltd., a Bahamas international business companyAMG WP GP Holdings Corp., a Delaware corporationAMG WP LP Holdings, LLC, a Delaware limited liability companyAMG/FAMI Investment Corp., a Nova Scotia corporationAMG/Midwest Holdings, Inc., a Delaware corporationAMG/Midwest Holdings, LLC, a Delaware limited liability companyAMG/North America Holding Corp., a Delaware corporationAQR Capital Management, LLC, a Delaware limited liability company*AQR Capital Management II, LLC, a Delaware limited liability company*AQR Capital Management (Europe) LLP, a UK limited liability partnership*AQR Capital Management Holdings, LLC, a Delaware limited liability company*AQR Capital Management (UK Services) Limited, a UK limited company*Arrow Acquisition LLC, a Delaware limited liability companyArrow Bidco Limited, a limited company incorporated in the United KingdomArtemis Asset Management Limited, a limited company incorporated in the United KingdomArtemis Fund Managers Limited, a limited company incorporated in the United KingdomArtemis Investment Management LLP, a United Kingdom limited liability partnershipArtemis Strategic Asset Management Limited, a limited company incorporated in the United KingdomBaker Street Advisors LLC, a Delaware limited liability companyBaring Private Equity Asia Group Investments Ltd, a Mauritius company*Baring Private Equity Asia Group Limited, a Cayman Islands exempted company*Baring Private Equity Asia K.K., a company incorporated in Japan*Baring Private Equity Asia Limited, a limited company incorporated in Hong Kong*Baring Private Equity Asia (Mauritius) Limited, a Mauritius company*Baring Private Equity Asia Pte Limited, a private limited company incorporated in Singapore*BPE Asia Real Estate Limited, a Cayman Islands exempted company*BPEA Advisors Private Limited, a private limited company incorporated in India*Beutel, Goodman & Company Ltd., a limited company incorporated in Canada*Bimini Atlantic Holdings Ltd., a Bahamas international business companyBlueMountain Capital Management, LLC, a Delaware limited liability company*BlueMountain Capital Partners (London) LLP, a UK limited liability partnership*BlueMountain CLO Management, LLC, a Delaware limited liability company*BlueMountain GP Holdings, LLC, a Delaware limited liability company*BlueMountain UK Holdings LLC, a Delaware limited liability company*BMCM Acquisition, LLC, a Delaware limited liability companyBowman Partners GP Co., a Cayman Islands exempted companyCapeview Capital LLP, an England and Wales limited liability partnership*Capula Investment Japan Limited, a company incorporated in Japan*Capula Investment Management Asia Limited, a company incorporated in Hong Kong*Capula Investment Management LLP, an England and Wales limited liability partnership*Capula Investment Services Limited, an England and Wales private limited company*Capula Investment US LP, a Delaware limited partnership*Capula Management Limited, a Cayman Islands exempted company*Capula Management US LLC, a Delaware limited liability company*Catalyst Acquisition II, Inc., a Delaware corporationChannel Ventures GP Limited, a Cayman Islands exempted companyChicago Acquisition, LLC, a Delaware limited liability companyChicago Equity Partners, LLC, a Delaware limited liability companyClarfeld Financial Advisors, LLC, a Delaware limited liability company*CML Holdings LLC, a Cayman Islands limited liability companyCPEG-Pantheon GP Limited, a Scotland companyCVC Holdings LLC, a Cayman Islands limited liability companyDeans Knight Capital Management Ltd., a Canada corporation*EIG Asset Management, LLC, a Delaware limited liability company*EIG Credit Management Company, LLC, a Delaware limited liability company*EIG Funds Management, LLC, a Delaware limited liability company*EIG Global Energy (Asia) Ltd., a Hong Kong private company*EIG Global Energy (Australia) Pty. Ltd., an Australia private company*EIG Global Energy (Brasil) Representacoes Ltda., a Brazil limited liability company*EIG Global Energy (Europe) Ltd., a UK limited company*EIG Global Energy Korea, Ltd., a Korea limited company*EIG Management Company, LLC, a Delaware limited liability company*EIG Principals Incentive Carry Vehicle, LP, a Delaware limited partnership*EIG Principals Incentive Carry Vehicle II, LP, a Delaware limited partnership*EIG Principals Incentive Carry Vehicle III, LP, a Cayman Islands limited partnership*El-Train Acquisition LLC, a Delaware limited liability companyEmpire Acquisition (WP), LLC, a Delaware limited liability companyFA (WY) Acquisition Company, Inc., a Delaware corporationFCMC Holdings LLC, a Delaware limited liability companyFIAMI Production Management Services 2001 Inc., a Canada corporationFirst Asset Capital Management (III) Inc., an Ontario corporationFirst Quadrant, L.P., a Delaware limited partnershipFoyston, Gordon & Payne Inc., a Canada corporationFrontier Capital Management Company, LLC, a Delaware limited liability companyGE Asia GP LLC, a Delaware limited liability companyGenesis Asset Managers, LLP, a Delaware limited liability partnershipGenesis Investment Management, LLP, a United Kingdom limited liability partnership*Gotham Acquisition GP, LLC, a Delaware limited liability companyGotham Acquisition LP, LLC, a Delaware limited liability companyGW&K Investment Management, LLC, a Delaware limited liability companyHarding Loevner LP, a Delaware limited partnershipHarding Loevner (UK) Ltd., a UK limited companyHWL Holdings Corp., a Delaware corporationIIM Acquisition LP, a Delaware limited partnershipIvory Capital Group, LLC, a Delaware limited liability company*Ivory Investment Management, LLC, a Delaware limited liability company*J.M. Hartwell Limited Partnership, a Delaware limited partnershipKlee Asia I GP, LLC, a Delaware limited liability companyKlee Europe I GP, LLC, a Delaware limited liability companyKlee Europe II GP, LLC, a Delaware limited liability companyKlee USA I GP, LLC, a Delaware limited liability companyLife Investor of Korea GP, LLC, a Delaware limited liability companyLong-Term Equity Interests Plan 2010, LP, a Delaware limited partnership*Long-Term Equity Interests Plan 2011, LP, a Delaware limited partnership*Long-Term Equity Interests Plan, LP, a Delaware limited partnership*LTEIP 2011 GP Holdings Corp., a Delaware corporationLTEIP GP Holdings, LLC, a Delaware limited liability companyLTEIP LP Holdings, LLC, a Delaware limited liability companyMonteverdi GP Limited, a limited company incorporated in ScotlandMontrusco Bolton Investments Inc., a Canada corporation*myCIO Wealth Partners, LLC, a Delaware limited liability companyNew GAML Holdco, Ltd., a Cayman Islands exempted companyOdin GP, LLC, a Delaware limited liability companyOld VAM LLP, a UK limited liability partnershipPantheon 2015-K GP, Ltd. A Cayman Islands exempted companyPantheon Access GP S.a.r.l., a Grand Duchy of Luxembourg companyPantheon Access US GP, LLC, a Delaware limited liability companyPantheon Birkin GP LLC, a Delaware limited liability companyPantheon BVK 2014 GP, LLC, a Delaware limited liability companyPantheon BVK GP LLC, a Delaware limited liability companyPantheon Capital (Asia) Limited, a limited company incorporated in Hong KongPantheon Capital Partners GP, LLC, a Delaware limited liability companyPantheon CK SPV GP, LLC, a Delaware limited liability companyPantheon Concipio GP, LLC, a Delaware limited liability companyPantheon CV (Cayman) GP, Ltd., a Cayman Islands limited companyPantheon Donald GP, LLC, a Delaware limited liability companyPantheon Duo BidCo GP, LLC, a Delaware limited liability companyPantheon - Flying Fox GP, LLC, a Delaware limited liability companyPantheon Friar Holdings, Ltd., a Cayman Islands exempted companyPantheon Gateway MSouth SPV GP, LLC, a Delaware limited liability companyPantheon Global Co-Investment Opportunities GP Ltd, a Cayman Islands exempted companyPantheon Global Co-Investment WGP GP, Ltd., a Cayman Islands companyPantheon GP Limited, a limited company incorporated in England and WalesPantheon GT GP, LLC, a Delaware limited liability companyPantheon GT Holdings, GP, a Cayman Islands exempted companyPantheon (Guernsey) GP Limited, a Guernsey limited companyPantheon - HK Project Universe GP, LLC, a Delaware limited liability companyPantheon HO GP, LLC, a Delaware limited liability companyPantheon HO Holdings, GP, a Cayman Islands exempted companyPantheon Holdings Limited, a limited company incorporated in England and WalesPantheon Industriens GP, LLC, a Delaware limited liability companyPantheon Industriens II GP, LLC, a Delaware limited liability companyPantheon - Ista Co-Investment, GP, LLC, a Delaware limited liability companyPantheon Korea Inc., a Korea companyPantheon KP GT Strategic Private Investments GP, LLC, a Delaware limited liability companyPantheon KP KFH Strategic Private Investments GP, LLC, a Delaware limited liability companyPantheon KSA GP, LLC, a Delaware limited liability companyPantheon KSA (Guernsey) GP Limited, a Guernsey limited companyPantheon Lille GP Limited, a limited company incorporated in ScotlandPantheon Lux GP S.a.r.l., a Grand Duchy of Luxembourg companyPantheon Maury GP, LLC, a Delaware limited liability companyPantheon (Midway) GP, LLC, a Delaware limited liability companyPantheon Multi-Strategy Program 2014 US GP, LLC, a Delaware limited liability companyPantheon NPS GP, LLC, a Delaware limited liability companyPantheon OPERS GP, LLC, a Delaware limited liability companyPantheon Partners Participation GP, LLC, a Delaware limited liability companyPantheon PGCO GP, LLC, a Delaware limited liability companyPantheon Psagot GP, Ltd., a Cayman Islands limited companyPantheon PSI GP, LLC, a Delaware limited liability companyPantheon Real Assets GT GP, LLC, a Delaware limited liability companyPantheon Real Assets HO GP, LLC, a Delaware limited liability companyPantheon REX GP, LLC, a Delaware limited liability companyPantheon ROA GP, LLC, a Delaware limited liability companyPantheon SCERS SIRF MM, LLC, a Delaware limited liability companyPantheon Securities LLC, a Delaware limited liability companyPantheon Standard GP, LLC, a Delaware limited liability companyPantheon UK General Partner 2 Limited, a limited company incorporated in England and WalesPantheon UK General Partner Limited, a limited company incorporated in England and WalesPantheon (UK) GP LLP, a limited liability partnership formed in ScotlandPantheon (US) LLC, a Delaware limited liability companyPantheon VA-Infrastructure II GP, LLC, a Delaware limited liability companyPantheon/VA NRP GP, LLC, a Delaware limited liability companyPantheon Ventures (Guernsey) Limited, a Guernsey limited companyPantheon Ventures (HK) LLP, an England and Wales limited liability partnershipPantheon Ventures Inc., a California corporationPantheon Ventures Limited, a limited company incorporated in England and WalesPantheon Ventures (Scotland) GP Limited, a limited company incorporated in ScotlandPantheon Ventures (UK) LLP, an England and Wales limited liability partnershipPantheon Ventures (US) Holdings LLP, a Delaware limited liability partnershipPantheon Ventures (US) LP, a Delaware limited partnershipPantheon Zeus GP, Ltd., a Cayman Islands companyPapillon GP, LLC, a Delaware limited liability companyPartner Advisory Services, L.P., a Delaware limited partnership*Partner Asset Management LLC, a Delaware limited liability company*Partner Investment Management, L.P., a Delaware limited partnership*PASIA V GP Limited, a limited company incorporated in GuernseyPASIA VI GP, LLC, a Delaware limited liability companyPEAF VI GP, LLC, a Delaware limited liability companyPEMF (ex-Asia) GP, LLC, a Delaware limited liability companyPEURO IV GP, LLC, a Delaware limited liability companyPEURO V GP Limited, a limited company incorporated in GuernseyPEURO VI GP Limited, a limited company incorporated in GuernseyPEURO VII GP Limited, a limited company incorporated in GuernseyPFM Acquisition LP, a Delaware limited partnershipPGCO II GP, LLC, a Delaware limited liability companyPGCO III GP, LLC, a Delaware limited liability companyPGIF GP Limited, a limited company incorporated in GuernseyPGIF GP, LLC, a Delaware limited liability companyPGIF II GP LLC, a Delaware limited liability companyPGIF II Lux GP S.a.r.l., a Grand Duchy of Luxembourg companyPGIH - Holte GP, LLC, a Delaware limited liability companyPGIH - Shades GP, LLC, a Delaware limited liability companyPGInfra GP (Cayman), Ltd., a Cayman Islands companyPGSF II GP, LLC, a Delaware limited liability companyPGSF III GP Limited, a limited company incorporated in GuernseyPGSF III GP, LLC, a Delaware limited liability companyPGSF IV GP, LLC, a Delaware limited liability companyPGSF V GP, LLC, a Delaware limited liability companyPGSH GP, LLC, a Delaware limited liability companyPGSH II GP, LLC, a Delaware limited liability companyPREMIUM Private Equity VI General Partner S.a.r.l., a Grand Duchy of Luxembourg companyPrides Crossing Holdings LLC, a Delaware limited liability companyPUSA VI GP, LLC, a Delaware limited liability companyPUSA VII GP, LLC, a Delaware limited liability companyPUSA VIII GP, LLC, a Delaware limited liability companyPUSA IX Feeder GP Limited, a limited company incorporated in England and WalesPUSA IX GP, LLC, a Delaware limited liability companyPUSA SFP IX GP, LLC, a Delaware limited liability companyPVP II GP, LLC, a Delaware limited liability companyRed Mile Syndication Inc., an Ontario corporationRiver Road Asset Management, LLC, a DE limited liability companyRRAM Acquisition, LLC, a Delaware limited liability companySCP GP, LLC, a Delaware limited liability companySouthernSun Asset Management, LLC, a Delaware limited liability companySouthernsun Asset Management (UK) Ltd., a limited company incorporated in England and WalesSquam Acquisition GP, LLC, a Delaware limited liability companySquam Acquisition LP, LLC, a Delaware limited liability companySSAM Acquisition, LLC, a Delaware limited liability companySystematic Financial Management, L.P., a Delaware limited partnershipSystematica Holdings Limited, a non-cellular company limited by shares incorporated in Guernsey*Systematica Investments GP Limited, a registered private company incorporated in Jersey*Systematica Investments Guernsey LP, a Guernsey limited partnership*Systematica Investments Jersey Limited, a registered private company incorporated in Jersey*Systematica Investments Limited, a registered private company incorporated in Jersey*Systematica Investments LP, a Guernsey limited partnership*Systematica Investments Services Limited, a private limited company incorporated in England and Wales*Systematica Investments Singapore Pte. Limited, a company incorporated in Singapore*Systematica Investments US LLC, a Delaware limited liability company*The Real Return Group Limited, a UK limited companyThe Renaissance Group LLC, a Delaware limited liability companyThird Avenue Holdings Delaware LLC, a Delaware limited liability companyThird Avenue Management LLC, a Delaware limited liability companyTimesSquare Capital Management, LLC, a Delaware limited liability companyTimesSquare Manager Member, LLC, a Delaware limited liability companyTitan NJ GP Holdings, Inc., a Delaware corporationTitan NJ LP Holdings, LLC, a Delaware limited liability companyTMF Corp., a Delaware corporationTopspin Acquisition, LLC, a Delaware limited liability companyTrident NYC Acquisition, LLC, a Delaware limited liability companyTrilogy Global Advisors International LLP, a limited liability partnership incorporated in the United KingdomTrilogy Global Advisors UK Holdings Limited, a limited company incorporated in the United KingdomTrilogy Global Advisors, LP, a Delaware limited partnershipTweedy, Browne Company LLC, a Delaware limited liability companyUnion Acquisition, LLC, a Delaware limited liability companyVA Partners I, LLC, a Delaware limited liability company*VA Partners III, LLC, a Delaware limited liability company*VA SmallCap Partners, LLC, a Delaware limited liability company*Value Partners Group Limited, a Cayman Islands exempted company*ValueAct Capital Management, L.P., a Delaware limited partnership*ValueAct Capital Management, LLC, a Delaware limited liability company *ValueAct Holdings GP, LLC, a Delaware limited liability company*ValueAct Holdings, L.P., a Delaware limited partnership*ValueAct SmallCap Management, LLC, a Delaware limited liability company*ValueAct SmallCap Management, L.P., a Delaware limited partnership*VAM Bidco Limited, a private UK limited companyVeritable, LP, a Delaware limited partnershipVeritas Asset Management (Asia) Limited, a Hong Kong companyVeritas Asset Management LLP, a UK limited liability partnershipVeritas Asset Partners Limited, a UK limited companyVeritas Corporate Management Limited, a UK limited company*Veritas Returns Limited, a UK limited companyWatson Acquisition, LLC, a Delaware limited liability companyWealth Partners Capital Group, LLC, a Delaware limited liability company*Welch & Forbes LLC, a Delaware limited liability companyWindermere Cayman LP, a Cayman Islands exempted limited partnershipWinton Capital Asia Limited, a Hong Kong company*Winton Capital Japan Co., Ltd, a company incorporated in Japan*Winton Capital Management Limited, a UK private limited company*Winton Capital US LLC, a Delaware limited liability company*Winton Fund Management Limited, a UK private limited company*Winton Group Limited, a UK private limited company*Winton Outbound Investment Fund Management (Shanghai) Co., Ltd. a Peoples Republic of China company*WP Group, LLC, a Delaware limited liability companyYacktman Asset Management LP, a Delaware limited partnershipQuickLinksExhibit 21.1QuickLinks -- Click here to rapidly navigate through this documentExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S‑3 (No. 333-210819) and S‑8 (No. 333-190412, No. 333-175912, No. 333-135416, No. 333-129748, No. 333-100628, No. 333-84485, and No. 333-72967) of Affiliate Managers Group, Inc. of our report datedFebruary 23, 2018 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, whichappears in this Form 10‑K./s/ PricewaterhouseCoopers LLPBoston, MAFebruary 23, 2018QuickLinksExhibit 23.1QuickLinks -- Click here to rapidly navigate through this documentExhibit 31.1CERTIFICATION PURSUANT TO SECTION 302(a)OF THE SARBANES-OXLEY ACT OF 2002I, Sean M. Healey, certify that:1.I have reviewed this Annual Report on Form 10-K of Affiliated Managers Group, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlover financial reporting.Date: February 23, 2018 /s/ SEAN M. HEALEY Sean M. HealeyChief Executive Officer and ChairmanQuickLinksExhibit 31.1QuickLinks -- Click here to rapidly navigate through this documentExhibit 31.2CERTIFICATION PURSUANT TO SECTION 302(a)OF THE SARBANES-OXLEY ACT OF 2002I, Jay C. Horgen, certify that:1.I have reviewed this Annual Report on Form 10-K of Affiliated Managers Group, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlover financial reporting.Date: February 23, 2018 /s/ JAY C. HORGEN Jay C. HorgenChief Financial Officer and TreasurerQuickLinksExhibit 31.2QuickLinks -- Click here to rapidly navigate through this documentExhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Affiliated Managers Group, Inc. (the "Company") for the period ended December 31, 2017 asfiled with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Sean M. Healey, Chief Executive Officer of theCompany, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:(1)the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: February 23, 2018 /s/ SEAN M. HEALEY Sean M. HealeyChief Executive OfficerQuickLinksExhibit 32.1QuickLinks -- Click here to rapidly navigate through this documentExhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Affiliated Managers Group, Inc. (the "Company") for the period ended December 31, 2017 asfiled with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Jay C. Horgen, Chief Financial Officer and Treasurerof the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:(1)the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: February 23, 2018 /s/ JAY C. HORGEN Jay C. HorgenChief Financial Officer and TreasurerQuickLinksExhibit 32.2

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