Artisan Partners Asset Management (APAM) risk factors, FY2025 10-K

Human Capital Risks

1. 01The loss of key investment professionals or senior members of our distribution and management teams could have a material adverse effect on our business
2. 02Changes to our investment environment or compensation structures, or decisions related to resource allocation, could cause instability within our investment teams and/or have an adverse effect on the performance of our investment strategies, our financial results and our ability to grow

Market and Investment Performance Risks

1. 03Poor investment performance leads to a loss of AUM which reduces our revenues and negatively impacts our financial condition25% rewritten
2. 04Difficult market conditions typically adversely affect our business in many ways, including by reducing our AUM and causing clients to withdraw funds, each of which reduces our revenues and impacts our financial condition25% rewritten
3. 05social, civil or political unrest, public health crises, changes in trade policies, including the imposition of new or increased tariffs and the economic impact, volatility and uncertainty resulting therefrom, the imposition of economic sanctions or other unpredictable eventsNew
4. 06Several of our investment strategies invest principally in the securities of non-U.S. companies, which involve foreign currency exchange risks and may face heightened tax, political, social, economic and legal risks41% rewritten
5. 07We may not be able to maintain our current fee rates as a result of poor investment performance, competitive pressures, changes in global markets and asset classes, changes in our business mix or for other reasons, which could have a material adverse effect on our profit margins and results of operations
6. 08We depend on third parties to market our investment strategies23% rewritten
7. 09The investment management industry is intensely competitive and experiencing transformative pressures. Failure to address these transformative pressures and remain competitive could negatively impact our business25% rewritten

Risks Related to our Business

1. 10Our efforts to establish and develop new teams, strategies and vehicles, or pursue other strategic transactions, may face challenges or ultimately be unsuccessful, which could impact our results of operations, reputation and culture23% rewritten
2. 11We derive substantially all of our revenues from contracts and relationships that may be terminated upon short or no notice
3. 12Investors in many of the funds we advise can redeem their investments at any time without prior notice or with fairly limited notice, which would reduce our AUM and could adversely affect our earnings
4. 13The majority of our AUM are managed in primarily long-only, equity investment strategies, which exposes us to greater risk than certain of our competitors who may manage more assets in diverse strategies23% rewritten
5. 14Our credit and alternative investment strategies present investment, operational, distribution and other risks that are different in kind and/or degree from those presented by our earlier investment strategies and dealing with those risks presents us with new challenges
6. 15If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses
7. 16We provide a range of services to Artisan Funds, Artisan Global Funds, Artisan Private Funds and sub-advised funds which may expose us to liability
8. 17Our real estate funds are subject to the risks inherent in the ownership and operation of real estate and the construction and development of real estateNew

Risks Related to Legal or Regulatory Factors and Taxation

1. 18Failure to properly address conflicts of interest could harm our reputation or cause clients to withdraw funds, each of which could adversely affect our business and results of operations
2. 19Our failure to comply with clients’ investment guidelines and applicable legal limitations could result in damage awards against us and a loss of AUM, either of which could adversely affect our reputation and financial condition
3. 20Employee misconduct, or perceived misconduct, could expose us to significant legal liability and/or reputational harm
4. 21The expansion of our business outside of the United States raises tax and regulatory risks, may adversely affect our profit margins and places additional demands on our resources and employees44% rewritten
5. 22Changes in tax laws or exposure to additional tax liabilities could have a material impact on our financial condition, results of operations and liquidity
6. 23We are subject to extensive, complex and sometimes overlapping laws, rules and regulations that are subject to continual change50% rewritten
7. 24The investment management industry faces substantial litigation risks which could materially adversely affect our business, financial condition or results of operations or cause significant reputational harm to us
8. 25A change of control could result in termination of our investment management agreements with mutual funds and could trigger consent requirements in our other investment management agreements

Operational, Technology and Cybersecurity Risks

1. 26We depend on a variety of systems to operate and any failures of or damage to those systems, or those of third parties with which we do business, may disrupt our operations, result in losses, damage our reputation or limit our growth
2. 27Any significant failure of, damage to or attack on our information security infrastructure, software applications or other systems that are critical to our operations could disrupt our business, damage our reputation and result in regulatory penalties or other additional costs to us42% rewritten
3. 28intelligence (AI), and the use of AI by other market participants, may increase our exposure to operational, cybersecurity, privacy and reputational risksNew
4. 29Our ability to manage and grow our business successfully can be impeded by systems and other technological limitationsNew
5. 30Developing regulatory treatment of AI, and failure to adequately address AI-related challenges, creates a risk of reputational harm and an impediment to growthNew
6. 31Our indebtedness may expose us to material risks33% rewritten
7. 32Our note purchase agreements and revolving credit agreement contain, and our future indebtedness may contain, various covenants that may limit our business activities

Risks Related to Our Structure

1. 33Control by our stockholders committee of approximately 9% of the combined voting power of our capital stock and the rights of holders of limited partnership units of Artisan Partners Holdings may give rise to conflicts of interest21% rewritten
2. 34Our ability to pay regular dividends to our stockholders is subject to the discretion of our Board and may be limited by our structure and applicable provisions of Delaware law
3. 35Our ability to pay taxes and expenses, including payments under the tax receivable agreements (“TRAs”), may be limited by our holding company structure
4. 36We will be required to pay the TRA beneficiaries for certain tax benefits we claim, and we expect that the payments we will be required to make will be substantial
5. 37In certain cases, payments under the TRAs may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the TRAs
6. 38If we were deemed an investment company under the 1940 Act as a result of our ownership of Artisan Partners Holdings, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business

Risks Related to Our Class A Common Stock

1. 39Equity markets and the price of our Class A common stock have been, and may continue to be, volatile, which could result in rapid and substantial losses for our stockholders
2. 40Future sales of our Class A common stock in the public market could lower our stock price, and any future sale of equity or convertible securities may dilute existing stockholders’ ownership in us43% rewritten
3. 41Provisions in our organizational documents, equity award agreements and Delaware law could discourage a change of control that stockholders may favor, which could negatively affect the market price of our Class A common stock
4. 42Our restated certificate of incorporation contains a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents
5. 43Our restated certificate of incorporation provides that certain of our investors do not have an obligation to offer us business opportunities