TPG (TPG) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01We depend on our senior leadership and key investment and other professionals, and the loss of their services or investor confidence in them could have a material adverse effect on our results of operations, financial condition and cash flow
2. 02Our ability to attract, retain and motivate investment and other key professionals is critical to our success. Our failure to do so could have a material adverse effect on our results of operations, financial condition and cash flow
3. 03Poor performance of our funds would cause a decline in our revenue, may obligate us to repay performance allocations previously paid to us and could negatively impact our ability to raise capital for future funds22% rewritten
4. 04Our inability to raise new funds or capital for our funds could result in lower management fees and less capital to invest and place pressure on fees and fee arrangements of future funds, which could have a material adverse effect on our results of operations, financial condition and cash flow39% rewritten
5. 05investments in alternative assets without the assistance of investment advisers like us. Such institutional investors may become our competitors and could cease to be our clientsNew
6. 06A decline in the pace or size of investments by our funds could result in our receiving less revenue from fees
7. 07We may reduce our AUM, limit its growth, reduce our fees or otherwise alter the terms under which we do business when we deem it to be in the best interest of our fund investors, even when such actions may be contrary to the near-term interests of stockholders
8. 08Our investors in future funds may negotiate to pay us lower management fees, reimburse us for fewer expenses or change the economic terms to be less favorable to us than those of our existing funds, which could have a material adverse effect on our results of operations, financial condition and cash flow28% rewritten
9. 09We may not be successful in executing or managing the complexities of new investment strategies, in expanding into new markets and businesses or in attracting new types of investors, which could have a material adverse effect on our results of operations, financial condition and cash flow48% rewritten
10. 10Sustainability-related compliance and reporting may result in increased compliance costs, litigation or enforcement actions, reputational harm, irreconcilable inconsistencies across jurisdictions and/or some investors not investing in or seeking to exit our fundsNew
11. 11Third-party investors in our funds have the right under certain circumstances to remove the general partner of the fund, terminate commitment periods or dissolve the funds, each of which could lead to a substantial decrease in our revenues39% rewritten
12. 12Parts of our revenue, earnings and cash flow are highly variable, which could cause volatility in the price of our Class A common stock
13. 13Our funds’ historical returns should not be considered as indicative of our or our funds’ future results or of any returns expected on an investment in our Class A common stock
14. 14Our investments in portfolio companies and the financial performance of our funds and their portfolio companies could negatively impact our results of operations, financial condition and cash flow
15. 15Valuation methodologies for certain fund assets may involve subjective judgments, and our valuation of an investment could differ significantly from the value that is obtained upon the investment’s exit, which could result in significant losses for us and our funds
16. 16The due diligence process that we undertake in connection with our investments may not reveal all facts that may be relevant in connection with an investment
17. 17Many of our funds invest in relatively high-risk, illiquid assets, and we may fail to realize any profits from these activities for a considerable period of time or lose some or all of the principal amount we invest
18. 18Our funds invest in companies that are based outside of the United States, which may expose us to additional risks not typically associated with investing in companies that are based in the United States
19. 19Ongoing trade negotiations and the potential for further regulatory reform in the United States and abroad may create regulatory uncertainty for us, our funds and our funds’ portfolio companies and our investment strategies and negatively impact the profitability of our funds and our funds’ portfolio companies39% rewritten
20. 20Changes in China’s governmental policies could have an adverse effect on our business and operations33% rewritten
21. 21Risk management activities may not be successful and, in some cases, may negatively impact the return on our and our funds’ investments
22. 22Operational risks, including those associated with our business model, could disrupt our businesses, result in losses or limit our growth63% rewritten
23. 23Failure to maintain the security of our information and technology networks or data security breaches could harm our reputation and have a material adverse effect on our results of operations, financial condition and cash flow29% rewritten
24. 24Artificial intelligence and other machine learning techniques could increase competitive, operational, legal and regulatory risks to our businesses in ways that we cannot predict
25. 25We and our funds are subject to risks in using third-party service providers, including administrators, custodians, executing brokers, prime brokers and other agents
26. 26Our activities and the business activities of certain of our personnel may give rise to conflicts of interest with our funds, and our failure to deal appropriately with conflicts of interest could damage our reputation and negatively impact our business73% rewritten
27. 27portfolio investment that goes into bankruptcy or reorganization, becomes insolvent or otherwise experiences financial distress or is unable to meet its payment obligations). See “—Information barriers” belowNew
28. 28Conflicts of interest with our partners, directors, senior advisors, professionals or business partners could damage our reputation and negatively impact our business37% rewritten
29. 29Because members of our senior leadership team own a significant economic interest in us primarily through other entities, conflicts of interest may arise between them and holders of shares of our Class A common stock or us
30. 30Certain of our funds employ special situation and distressed debt investment strategies that involve significant risks68% rewritten
31. 31Our real estate funds’ portfolio investments are subject to the risks inherent in the ownership and operation of real estate and real estate-related businesses and assets
32. 32Our broker-dealer’s capital markets activities expose us to risks that, if they materialize, could have a material adverse effect on our results of operations, financial condition and cash flow40% rewritten
33. 33Certain of our management agreements with investment vehicles that are publicly registered companies with the SEC are subject to limitation or termination, and any such termination could have a material adverse effect on our business, results of operations and financial condition
34. 34Funds associated with our secondaries investment products are subject to additional risks
35. 35Movements in the global credit markets could adversely affect our funds’ credit investments and our CLO vehicles79% rewritten
36. 36Our provision of products and services to insurance companies subjects us to a variety of risks and uncertaintiesNew
37. 37long-term policyholder obligations, we may not be successful in retaining existing relationships, developing new ones or originating or selling capital-efficient assets or products. Such failure may have a material adverse effect on our business, results and financial conditionNew
38. 38Pending and future litigation could result in significant liabilities and reputational harm, which could have a material adverse effect on our results of operations, financial condition and cash flow
39. 39Contingent liabilities could harm the performance of our funds
40. 40In certain circumstances, we are required to return previously distributed performance allocations. The partnership documents governing our funds generally include a clawback provision that, if triggered, requires us to return distributions of performance allocations to the fund for distribution to fund investors

Risks Related to Our Organizational Structure

1. 41If we fail to maintain an effective system of internal control over financial reporting or comply with the rules that apply to public companies, including Section 404 of the Sarbanes-Oxley Act, we could be subject to sanctions or other penalties that would harm our business
2. 42We are a holding company and our only material asset is our interest in the TPG Operating Group, and we are accordingly dependent upon distributions from the TPG Operating Group to pay taxes, make payments under the Tax Receivable Agreement and pay dividends
3. 43If we are deemed an “investment company” subject to regulation under the Investment Company Act as a result of our ownership of the TPG Operating Group, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business
4. 44A change of control of our company could result in an assignment of our investment advisory agreements23% rewritten
5. 45The disparity in the voting rights among the classes of our common stock and inability of the holders of our Class A common stock to influence decisions submitted to a vote of our stockholders may have an adverse effect on the price of our Class A common stock
6. 46We may continue to pay dividends to our stockholders, but our ability to do so is subject to the discretion of our board of directors and may be limited by our holding company structure and applicable provisions of Delaware law
7. 47Our share price may decline due to the large number of shares eligible for sale58% rewritten
8. 48assignments of distributions from the TPG Operating Group and for transfers to related parties and charitable organizationsNew
9. 49The market price of our Class A common stock may be volatile, which could cause the value of our stockholders’ investments to decline
10. 50Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and may negatively affect the market price of our Class A common stock
11. 51If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our Class A common stock, the price of our Class A common stock could decline
12. 52We are required to pay certain holders of Common Units (or their assignees under the Tax Receivable Agreement) for most of the tax benefits that we may claim as a result of the Covered Tax Items (as defined below)
13. 53In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement
14. 54The acceleration of payments under the Tax Receivable Agreement in the case of certain changes of control may impair our ability to consummate change of control transactions or negatively impact the value received by owners of our Class A common stock

Risks Related to Our Indebtedness

1. 55Our use of borrowings to finance our business exposes us to risks22% rewritten
2. 56We have significant liquidity requirements, and adverse market and economic conditions may negatively impact our sources of liquidity, which could have a material adverse effect on our results of operations, financial condition and cash flow21% rewritten
3. 57Dependence on significant leverage by certain of our funds and their investments could adversely affect the ability of our funds to achieve attractive rates of return on those investments
4. 58Any of the foregoing circumstances could have a material adverse effect on our results of operations, financial condition and cash flow

Risks Related to Our Industry

1. 59The alternative asset management business is intensely competitive, which could have a material adverse effect on our results of operations, financial condition and cash flow21% rewritten
2. 60Further, we believe that competition for investment opportunities is based primarily on the pricing, terms and structure of a proposed investment, certainty of execution and business relationships that provide access to opportunities
3. 61Climate change and climate policies and regulation could adversely affect our business
4. 62Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. Increased regulatory focus on the alternative asset industry or legislative or regulatory changes could result in additional burdens and expenses on our business73% rewritten
5. 63Changes in the U.S. political environment and financial regulatory changes in the United States could negatively impact our business52% rewritten
6. 64Changing regulations regarding derivatives, including commodity interest transactions, could negatively impact our business
7. 65Federal, state and foreign financial crime, trade and foreign investment laws applicable to us, our funds and our funds’ portfolio companies create the potential for significant liabilities and penalties, the inability to complete transactions and reputational harm29% rewritten
8. 66Regulatory initiatives in jurisdictions outside the United States could negatively impact our business66% rewritten
9. 67Any perceived or actual failure to comply with data privacy and security laws and regulations could adversely affect our operating results and businessNew

Risks Related to Taxation

1. 68Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could negatively impact our effective tax rate and tax liability26% rewritten
2. 69We may be required to fund withholding tax upon certain exchanges of Common Units into shares of our Class A common stock (or, in certain cases, shares of our nonvoting Class A common stock) by non-U.S. holders