Silvercrest Asset Management Group (SAMG) risk factors, FY2024 10-K

Risks Related to our Investment Performance and the Financial Markets

1. 01We may not be able to maintain our current fee structure as a result of poor investment performance, competitive pressures or as a result of changes in our business mix, which could have a material adverse effect on our profit margins and results of operations
2. 02The historical returns of our existing investment strategies may not be indicative of future results or of future results of investment strategies that we may develop
3. 03We derive a substantial portion of our revenues from a limited number of strategies and clients
4. 04Substantially all of our revenue generating contracts and relationships may be terminated upon no notice
5. 05Our long-only, equity investment focus may not obtain attractive returns in the short-term or during certain market periods and may expose us to greater risk than if our investment strategies included non-equity securities or hedged positions
6. 06The performance of our investment strategies or the growth of our assets under management may be constrained by the unavailability of appropriate investment opportunities
7. 07Our investment process requires us to conduct extensive fundamental research on any company before investing in it, which may result in missed investment opportunities and reduce the performance of our investment strategies
8. 08Our International Equity Strategies invest principally in the securities of non-U.S. companies, which involve foreign currency exchange, tax, political, social and economic uncertainties and risks

Risks Related to Our Growth

1. 09Our efforts to establish new investment teams and strategies may be unsuccessful and could negatively impact our results of operations and our reputation
2. 10We may enter into new lines of business, make strategic investments or acquisitions or enter into joint ventures, each of which may result in additional risks and uncertainties for our business
3. 11We may be unable to successfully execute strategic investments or acquisitions or enter into joint ventures, and we may fail to successfully integrate and operate new investment teams, which could limit our ability to grow assets under management and adversely affect our results of operations
4. 12we may be unable to quickly and efficiently integrate new acquisitions into our existing operations
5. 13The due diligence process that we undertake in connection with strategic investments or acquisitions or entry into joint ventures may not reveal all facts that may be relevant in connection with an investment, which could subject us to unknown liabilities
6. 14The significant growth we have experienced may be difficult to sustain

Risks Related to our Key Professionals

1. 15The loss of key investment professionals or members of our senior management team could have a material adverse effect on our business
2. 16If any member of our senior management or a key investment professional were to join a competitor or form a competing company, some of our current clients or other prominent members of the investing community could choose to invest with that competitor rather than us
3. 17Competition for qualified investment, management and marketing and client service professionals is intense and we may fail to successfully attract and retain qualified personnel in the future

Risks Related to our Structure

1. 18The rights of holders of Class B units of Silvercrest L.P. may give rise to conflicts of interest
2. 19Our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our structure and applicable provisions of Delaware law
3. 20Our ability to pay taxes and expenses, including payments under the tax receivable agreement, may be limited by our structure
4. 21We will be required to pay principals for certain tax benefits we may claim, and the amounts we may pay could be significant
5. 22In certain cases, payments under the tax receivable agreement to our principals may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement
6. 23If we were deemed an investment company under the Investment Company Act as a result of our ownership interest in Silvercrest L.P., 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. 24We provide a broad range of services to the Silvercrest Funds and family office services, which may expose us to liability

Risks Related to the Regulatory Environment in Which we Operate

1. 25The regulatory environment in which we operate is subject to continuous change, and regulatory developments designed to increase oversight may adversely affect our business
2. 26Failure 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
3. 27We could be subject to regulatory investigations, which could harm our reputation and cause our funds to lose existing investors or us to lose existing accounts or fail to attract new investors or accounts
4. 28Ongoing trade negotiations and potential for further regulatory reform may create regulatory uncertainty for our portfolio companies and our investment strategies and adversely affect the profitability of our portfolio companies
5. 29Increasing scrutiny from stakeholders on ESG matters, including our ESG reporting, exposes us to reputational and other risks
6. 30Our failure to comply with investment guidelines set by our clients and limitations imposed by applicable law could result in damage awards against us and a loss of our assets under management, either of which could adversely affect our results of operations or financial condition
7. 31Operational risks, including the threat of cyber-attacks, may disrupt our business, breach our clients’ security, result in losses or limit our growth
8. 32Improper disclosure of personal data could result in liability and harm our reputation
9. 33Employee misconduct could expose us to significant legal liability and reputational harm
10. 34Failure to properly address conflicts of interest could harm our reputation, business and results of operations
11. 35The investment management industry faces substantial litigation risks that could have a material adverse effect on our business, financial condition or results of operations or cause significant reputational harm to us
12. 36The investment management industry is intensely competitive
13. 37Reductions in business sourced through third-party distribution channels, or their poor reviews of us or our products, could materially reduce our revenue and ability to attract new clients
14. 38A change of control could result in termination of our sub-investment advisory and investment advisory agreements
15. 39If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses
16. 40Our reliance on prime brokers, custodians, administrators and other agents subjects us to certain risks relating to their execution of transactions and their solvency, and the failure by or insolvency of, any such person could adversely affect our business and financial performance
17. 41If we incur indebtedness or issue senior equity securities, we will be exposed to additional risks, including the typical risks associated with leverage
18. 42any preferred, convertible or exchangeable securities that we issue may have rights, preferences and privileges more favorable than those of our common stock
19. 43Future financings could adversely affect us and our common stockholders by diluting existing stockholders or by placing restrictions on our ability to run our business, including making distributions to unitholders
20. 44Newly enacted laws or regulations and future changes in the taxation of businesses may impact our effective tax rate or may adversely affect our business, financial condition and operating results
21. 45The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our stockholders
22. 46Future issuances and sales of our Class A common stock in the public market could lower our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us
23. 47Stockholders may experience dilution in the future
24. 48The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business
25. 49If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline
26. 50The amount and mix of our assets under management (“AUM”) are subject to significant fluctuations, and a shift in our asset mix toward lower-fee products may negatively impact our revenues and income
27. 51The ongoing conflicts in Ukraine and Gaza have, and will likely continue to, negatively impact the global economy and may have a material adverse effect on our business, operations and financial results