AlTi Global (ALTI) risk factors, FY2024 10-K

Risks Related to Macroeconomic Conditions

1. 01Difficult market and political conditions may reduce the value or hamper the performance of the investments made by our investment products and services or impair the ability of our investment products and services to raise or deploy capital
2. 02Inflation may adversely affect the business, results of operations and financial condition of our investment products and services
3. 03Higher interest rates could have a material adverse effect on our business and that of our investment products and services’ portfolio companies
4. 04Changes in market and economic conditions could lower the value of assets on which we earn revenue and could decrease the demand for our investment solutions and services
5. 05The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations, our financial condition, and results of operations

Risks Related to our Business and Industry

1. 06We are a holding company and our only material asset is our interest in our subsidiaries, and we are accordingly dependent upon distributions made by our subsidiaries to pay taxes, make payments under the Tax Receivable Agreement and pay dividends
2. 07The success of our business depends on the identification and availability of suitable investment opportunities for our clients
3. 08The historical returns attributable to our investment products and services should not be considered as indicative of the future results of our investment products and services or of our future results or of any returns expected on an investment in our Class A Common Stock
4. 09Valuation methodologies for certain assets of our investment products and services can be open to subjectivity
5. 10The due diligence process that we undertake in connection with investments and M&A may not reveal all facts that may be relevant in connection with an investment or acquisition
6. 11Dependence on leverage by certain funds, underlying investment funds and portfolio companies subjects us to volatility and contractions in the debt financing markets and could adversely affect the ability of our funds to achieve attractive rates of return on their investments
7. 12Defaults by third-party investors could adversely affect that fund’s operations and performance
8. 13Our failure to comply with investment guidelines of our clients could result in damage awards against us or a reduction in AUM, either of which would cause our earnings to decline and adversely affect our business
9. 14Investments by most of our funds, as well as by the External Strategic Managers in which we have made strategic investments, will include debt instruments and equity securities of companies that we do not control
10. 15The investment products, services, and investment strategies we currently pursue may expose us to specific market, tax, regulatory and other risks
11. 16Investments made on behalf of our clients may in many cases rank junior to investments made by other investors
12. 17Certain of our investments utilize special situation and distressed debt investment strategies that involve significant risks
13. 18Our investment advisory contracts may be terminated or may not be renewed by investors or fund boards on favorable terms and the liquidation of certain funds may be accelerated at the option of investors
14. 19We may sell our strategic investments in the External Strategic Managers or they may sell their businesses or exercise their rights to purchase our interests
15. 20We may establish fund vehicles in the future to own the existing strategic investments in our External Strategic Managers or to make strategic investments in new External Strategic Managers
16. 21If we are unable to compete effectively, our business and financial condition could be adversely affected
17. 22The anticipated benefits of future acquisitions that we may pursue may not be realized or may take longer than expected to realize
18. 23Potential conflicts of interest may arise in the allocation of investment opportunities among funds
19. 24Conflicts of interest may arise in our allocation of costs and expenses, and we are subject to increased regulatory scrutiny and uncertainty with regard to those allocations
20. 25Additional and unpredictable conflicts of interests may rise in the future
21. 26We have implemented procedures to mitigate potential conflicts of interest and address certain regulatory requirements that prevent us from fully realizing potential synergies across our various businesses
22. 27Failure to properly disclose conflicts of interest could harm our reputation, results of operations, financial condition or business
23. 28Additionally, we permit employees, former employees and other parties associated with the firm to invest in or alongside our funds on a no-fee, no-carry basis. These arrangements may create a conflict in connection with investments we make on behalf of our clients
24. 29We pay carried interest and performance-based fees to our investment professionals and other personnel in order to attract and retain them, which may result in a reduction of our revenues and a decrease in our profit margins

Risks Related to Geographical Environment

1. 30Our international operations subject us to numerous risks
2. 31Our operations in Hong Kong may be adversely affected by political and trade tensions between the U.S. and China

Risks Related to Our Regulatory Environment

1. 32We are exposed to litigation risk and subject to regulatory examinations and investigations
2. 33We are subject to extensive government regulation, and our failure or inability to comply with these regulations or regulatory action against us could adversely affect our results of operations, financial condition or business
3. 34We are subject to U.S. foreign investment regulations, which may impose conditions on or limit certain investors’ ability to purchase or maintain our Class A Common Stock
4. 35Changes in tax law or policy could increase our effective tax rate and tax liability or the taxes payable by investors in our funds or holders of shares of our Common Stock, each of which could have a material adverse effect on our business, financial condition and results of operations
5. 36We may be subject to the excise tax included in the Inflation Reduction Act of 2022 in connection with redemptions of our Class A Common Stock
6. 37Federal, state and foreign anti-corruption, export control and sanctions laws create the potential for significant liabilities and penalties and reputational harm
7. 38Failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our business
8. 39Failure to comply with regulations regarding the prevention of money laundering or terrorism or national security could adversely affect our business
9. 40to such investor or to cause such investor’s interests to be cancelled or otherwise redeemed (without the payment of any consideration in respect of those interests)
10. 41Financial regulations and changes thereto in the United States could adversely affect our business and the possibility of increased regulatory focus could result in additional burdens and expenses on our business
11. 42If adopted, the Safeguarding Rule would represent another radical change in the regulation of custodial practices under the Advisers Act and, like the existing Custody Rule, would likely present a number of significant and burdensome compliance challenges for investment advisers
12. 43We are exposed to data and cybersecurity risks that could result in data breaches, service interruptions, harm to our reputation, protracted and costly litigation or significant liability
13. 44If we are not able to satisfy data protection, security, privacy and other government- and industry-specific requirements or regulations, our results of operations, financial condition or business could be harmed
14. 45Confidentiality agreements with employees, consultants, and others may not adequately prevent disclosure of trade secrets and other proprietary information
15. 46We may face damage to our professional reputation and legal liability if our services are not regarded as satisfactory or for other reasons
16. 47Our inability to obtain adequate insurance could subject us to additional risk of loss or additional expenses
17. 48Our controls and procedures may fail or be circumvented, our risk management policies and procedures may be inadequate and operational risks could adversely affect our reputation and financial condition
18. 49If Umbrella were treated as a corporation for U.S. federal, state or local tax purposes, then the amount available for distribution by it could be substantially reduced and our financial condition and results of operations could be adversely affected
19. 50In certain cases, payments under the Tax Receivable Agreement may be accelerated or exceed the actual tax benefits realized by the Company
20. 51result, in certain circumstances we could make payments under the Tax Receivable Agreement in excess of our actual income or franchise tax savings, which could materially impair our financial condition

Risks Related to Personnel

1. 52We rely on our management team to grow our business, and the loss of key management members, or an inability to hire key personnel, could harm our business
2. 53Employee misconduct could harm us by impairing our ability to attract and retain fund investors and subjecting us to significant legal liability, regulatory scrutiny and reputational harm
3. 54Our future growth depends on our ability to attract, retain and develop human capital in a highly competitive talent market

Risks Related to Being a Public Company

1. 55Our management team has limited experience managing a public company
2. 56Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation
3. 57system will be met. Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, financial condition and results of operations
4. 58If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, our share price and trading volume could decline
5. 59As a public company, we are subject to additional laws, regulations and stock exchange listing standards, which will impose additional costs on us and may strain our resources and divert our management’s attention
6. 60If we are deemed an “investment company” subject to regulation under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business
7. 61Our quarterly operating results and other operating metrics may fluctuate from quarter to quarter, which makes these metrics difficult to predict
8. 62Any one of the factors above or the cumulative effect of some of the factors above may result in significant fluctuations in our operating results
9. 63Our ability to raise capital in the future may be limited
10. 64The forecasts of market growth and other projections included in this Annual Report may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, we cannot assure you that our business will grow at a similar rate, if at all
11. 65We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition and our share price, which could cause you to lose some or all of your investment
12. 66The certificate of incorporation contains certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
13. 67Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our stock price
14. 68Future resales of shares may cause the market price of our securities to drop significantly, even if our business is doing well