SAMG

Business Context and Reporting Period

Company: Silvercrest Asset Management Group Inc. (SAMG)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Silvercrest is a full-service wealth management firm providing financial advisory and family office services to ultra-high net worth individuals and institutional investors. As of December 31, 2025, the firm managed $37.0 billion in assets under management (AUM) across 828 client relationships. The firm operates as a holding company for Silvercrest L.P., with a dual-class share structure (Class A and Class B).

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenue increased by 1.3% ($1.7 million) to $125.3 million, driven by market appreciation in discretionary AUM, partially offset by net client outflows of $1.6 billion.
• Profitability Decline: Net income dropped significantly by 48.7% to $8.1 million. This was primarily due to a $7.3 million increase in compensation and benefits expenses and a $2.7 million increase in general and administrative expenses, which outpaced revenue growth.
• Expense Increases: Total expenses rose 9.4% to $116.0 million. Compensation increased due to merit-based raises, new hires, and higher bonus accruals. G&A expenses rose due to increased professional fees and bad debt reserves.
• Share Repurchases: The company aggressively repurchased Class A common stock, spending approximately $30.5 million in 2025 to buy back 1.98 million shares under its 2025 Repurchase Program.
• Debt Utilization: The company drew $4.0 million on its term loan facility in 2025, whereas no borrowings were outstanding in 2024.

Guidance, Outlook, and Risks

Management Commentary: Management attributes the AUM growth to market appreciation, noting that net client outflows were a headwind. The firm continues to focus on organic growth, strategic acquisitions, and expanding institutional relationships. Family office services revenue grew 10.0% to $4.8 million.

Risks and Contingencies:

• Market Volatility: Revenue is highly correlated with AUM, which fluctuates with market conditions. A decline in asset values would directly reduce fees.
• Client Concentration: The top 50 client relationships represent approximately 64% of AUM. The loss of a few large clients could materially impact results.
• Tax Receivable Agreement (TRA): The company has a liability of approximately $9.3 million related to the TRA, which requires paying 85% of tax savings realized from basis step-ups to principals. This liability is sensitive to stock price and tax rate changes.
• Key Personnel: The business relies heavily on senior portfolio managers; the departure of key professionals could lead to asset outflows.
• Regulatory Environment: The firm faces extensive regulation, including potential changes in tax laws and investment adviser rules.

Investor Verification Checklist

• AUM Composition: Verify the split between discretionary ($24.0 billion) and non-discretionary ($13.0 billion) assets, as fee structures differ significantly.
• Compensation Trends: Monitor the ratio of compensation to revenue, which increased in 2025, potentially pressuring future margins if revenue growth slows.
• Share Count Dilution/Accretion: Track the impact of the aggressive share repurchase program on earnings per share versus the potential dilution from Class B unit exchanges.
• TRA Liability: Review the valuation assumptions for the Tax Receivable Agreement liability, as changes in tax rates or stock price could alter the obligation.
• Client Retention: Assess the stability of the top 50 client relationships given their concentration of 64% of total AUM.