Forward-Looking Statements

When used in this Quarterly Report on Form 10-Q, in our other filings with the United States Securities and Exchange Commission, in our press releases and in oral statements made with the approval of an executive officer, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "may," "intends," "believes," "estimate," "project" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including, among others, the following:

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º our performance is directly affected by changing conditions in global financial markets generally and in the equity markets particularly, and a decline or a lack of sustained growth in these markets may result in decreased advisory fees or performance fees and a corresponding decline (or lack of growth) in our operating results and in the cash flow distributable to us from our Affiliates;

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º we cannot be certain that we will be successful in finding or investing in additional investment management firms on favorable terms, that we will be able to consummate announced investments in new investment management firms, or that existing and new Affiliates will have favorable operating results;

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º we may need to raise capital by making long-term or short-term borrowings or by selling shares of our common stock or other securities in order to finance investments in additional investment management firms or additional investments in our existing Affiliates, and we cannot be sure that such capital will be available to us on acceptable terms, if at all; and

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º those certain other factors discussed under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2008, and in any other filings we make with the Securities and Exchange Commission from time to time.

These factors (among others) could affect our financial performance and cause actual results to differ materially from historical earnings and those presently anticipated and projected. We will not undertake and we specifically disclaim any obligation to release publicly the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of events, whether or not anticipated. In that respect, we wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.

Overview

We are an asset management company with equity investments in a diverse group of boutique investment management firms (our "Affiliates"). We pursue a growth strategy designed to generate shareholder value through the internal growth of our existing business, additional investments in investment management firms and strategic transactions and relationships designed to enhance our Affiliates' businesses and growth prospects.

Through our Affiliates, we manage approximately $152.9 billion in assets (as of March 31, 2009) in more than 300 investment products across a broad range of asset classes and investment styles in three principal distribution channels:
Mutual Fund, Institutional and High Net Worth. We believe that our diversification across asset classes, investment styles and distribution channels helps to mitigate our exposure to the risks created by changing market environments. The following summarizes our operations in our three principal distribution channels.

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º Our Affiliates provide advisory or sub-advisory services to more than 100 mutual funds. These funds are distributed to retail and institutional clients directly and through intermediaries,

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º In the Institutional distribution channel, our Affiliates offer approximately 200 investment products across approximately 50 different investment styles, including small, small/mid, mid and large capitalization value, growth equity and emerging markets. In addition, our Affiliates offer quantitative, alternative, credit arbitrage and fixed income products. Through this distribution channel, our Affiliates manage assets for foundations and endowments, defined benefit and defined contribution plans for corporations and municipalities, and Taft-Hartley plans, with disciplined and focused investment styles that address the specialized needs of institutional clients.

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º The High Net Worth distribution channel is comprised broadly of two principal client groups. The first group consists principally of direct relationships with high net worth individuals and families and charitable foundations. For these clients, our Affiliates provide investment management or customized investment counseling and fiduciary services. The second group consists of individual managed account client relationships established through intermediaries, generally brokerage firms or other sponsors. Our Affiliates provide investment management services through approximately 100 managed account and wrap programs.

We operate our business through our Affiliates in our three principal distribution channels, maintaining each Affiliate's distinct entrepreneurial culture and independence through our investment structure. In making investments in boutique asset management firms, we seek to partner with the highest quality firms in the industry, with outstanding management teams, strong long-term performance records and a demonstrated commitment to continued growth and success. Fundamental to our investment approach is the belief that Affiliate management equity ownership (along with AMG's ownership) aligns our interests and provides Affiliate managers with a powerful incentive to continue to grow their business. Our investment structure provides a degree of liquidity and diversification to principal owners of boutique investment management firms, while at the same time expanding equity ownership opportunities among the firm's management and allowing management to continue to participate in the firm's future growth. Our partnership approach also ensures that Affiliates maintain operational autonomy in managing their business, thereby preserving their firm's entrepreneurial culture and independence.

Although the specific structure of each investment is highly tailored to meet the needs of a particular Affiliate, in all cases, AMG establishes a meaningful equity interest in the firm, with the remaining equity interests retained by the management of the Affiliate. Each Affiliate is organized as a separate firm, and its operating or shareholder agreement is structured to provide appropriate incentives for Affiliate management owners and to address the Affiliate's particular characteristics while also enabling us to protect our interests, including through arrangements such as long-term employment agreements with key members of the firm's management team.

In most cases, we own a majority of the equity interests of a firm and structure a revenue sharing arrangement, in which a percentage of revenue is allocated for use by management of that Affiliate in paying operating expenses of the Affiliate, including salaries and bonuses. We call this the "Operating Allocation." The portion of the Affiliate's revenue that is allocated to the owners of that Affiliate (including us) is called the "Owners' Allocation." Each Affiliate allocates its Owners' Allocation to its managers and to us generally in proportion to their and our respective ownership interests in that Affiliate.

One of the purposes of our revenue sharing arrangements is to provide ongoing incentives for Affiliate managers by allowing them to participate in the growth of their firm's revenue, which may increase their compensation from both the Operating Allocation and the Owners' Allocation. These

arrangements also provide incentives to control operating expenses, thereby increasing the portion of the Operating Allocation that is available for growth initiatives and compensation.

An Affiliate's Operating Allocation is structured to cover its operating expenses. However, should actual operating expenses exceed the Operating Allocation, our contractual share of cash under the Owners' Allocation generally has priority over the allocations and distributions to the Affiliate's managers. As a result, the excess expenses first reduce the portion of the Owners' Allocation allocated to the Affiliate's managers until that portion is eliminated, before reducing the portion allocated to us. Any such reduction in our portion of the Owners' Allocation is required to be paid back to us out of the portion of future Owners' Allocation allocated to the Affiliate's managers.

Our minority investments are also structured to align our interests with those of the Affiliate's management through shared equity ownership, as well as to preserve the Affiliate's entrepreneurial culture and independence by maintaining the Affiliate's operational autonomy. In cases where we hold a minority interest, the revenue sharing arrangement generally allocates a percentage of the Affiliate's revenue to us. The remaining revenue is used to pay operating expenses and profit distributions to the other owners.

Certain of our Affiliates operate under profit-based arrangements through which we own a majority of the equity in the firm and receive a share of profits as cash flow, rather than a percentage of revenue through a typical revenue sharing agreement. As a result, we participate fully in any increase or decrease in the revenue or expenses of such firms. In these cases, we participate in a budgeting process and generally provide incentives to management through compensation arrangements based on the performance of the Affiliate.

We are focused on establishing and maintaining long-term partnerships with our Affiliates. Our shared equity ownership gives both AMG and our Affiliate partners meaningful incentives to manage their businesses for strong future growth. From time to time, we may consider changes to the structure of our relationship with an Affiliate in order to better support the firm's growth strategy.

Through our affiliated investment management firms, we derive most of our revenue from the provision of investment management services. Investment management fees ("asset-based fees") are usually determined as a percentage fee charged on periodic values of a client's assets under management; most asset-based advisory fees are billed by our Affiliates quarterly. Certain clients are billed for all or a portion of their accounts based upon assets under management valued at the beginning of a billing period ("in advance"). Other clients are billed for all or a portion of their accounts based upon assets under management valued at the end of the billing period ("in arrears"). Most client accounts in the High Net Worth distribution channel are billed in advance, and most client accounts in the Institutional distribution channel are billed in arrears. Clients in the Mutual Fund distribution channel are billed based upon average daily assets under management. Advisory fees billed in advance will not reflect subsequent changes in the market value of assets under management for that period but may reflect changes due to client withdrawals. Conversely, advisory fees billed in arrears will reflect changes in the market value of assets under management for that period.

In addition, over 50 Affiliate alternative investment and equity products, representing approximately $27.5 billion of assets under management (as of March 31, 2009), also bill on the basis of absolute or relative investment performance ("performance fees"). These products, which are primarily in the Institutional distribution channel, are often structured to have returns that are not directly correlated to changes in broader equity indices and, if earned, the performance fee component is typically billed less frequently than an asset-based fee. Although performance fees inherently depend on investment results and will vary from period to period, we anticipate performance fees to be a recurring component of our revenue. We also anticipate that, within any calendar year, the majority of performance fees will typically be realized in the fourth quarter.

Our Net Income attributable to controlling interest reflects the revenue of our consolidated Affiliates and our share of income from Affiliates which we account for under the equity method, reduced by:

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º our expenses, including the operating expenses of our consolidated Affiliates; and

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º the profits allocated to managers of our consolidated Affiliates (i.e., income attributable to non-controlling interests).

As discussed above, for consolidated Affiliates with revenue sharing arrangements, the operating expenses of the Affiliate as well as its managers' non-controlling interest generally increase (or decrease) as the Affiliate's revenue increases (or decreases) because of the direct relationship established in many of our agreements between the Affiliate's revenue and its Operating Allocation and Owners' Allocation. At our consolidated profit-based Affiliates, expenses may or may not correspond to increases or decreases in the Affiliates' revenues.

Our level of profitability will depend on a variety of factors, including:

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º those affecting the global financial markets generally and the equity markets particularly, which could potentially result in considerable increases or decreases in the assets under management at our Affiliates;

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º the level of Affiliate revenue, which is dependent on the ability of our existing and future Affiliates to maintain or increase assets under management by maintaining their existing investment advisory relationships and fee structures, marketing their services successfully to new clients and obtaining favorable investment results;

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º our receipt of Owners' Allocation from Affiliates with revenue sharing arrangements, which depends on the ability of our existing and future Affiliates to maintain certain levels of operating profit margins;

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º the increases or decreases in the revenue and expenses of Affiliates that operate on a profit-based model;

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º the availability and cost of the capital with which we finance our existing and new investments;

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º our success in making new investments and the terms upon which such transactions are completed;

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º the level of intangible assets and the associated amortization expense resulting from our investments;

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º the level of our expenses, including compensation for our employees; and

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º the level of taxation to which we are subject.

Results of Operations

    The following table presents our Affiliates' reported assets under
management by operating segment (which are also referred to as distribution
channels in this Quarterly Report on Form 10-Q).

Assets under Management

                                    Mutual                         High
        (in billions)                Fund      Institutional     Net Worth     Total
        December 31, 2008            $ 34.7     $       109.4    $     26.0   $ 170.1
          Client cash inflows           1.5               7.2           1.3      10.0
          Client cash outflows         (2.7 )            (9.8 )        (1.9 )   (14.4 )

            Net client cash flows      (1.2 )            (2.6 )        (0.6 )    (4.4 )

          Other(1)                        -              (2.5 )        (0.1 )    (2.6 )
          Investment performance       (2.9 )            (5.9 )        (1.4 )   (10.2 )

        March 31, 2009               $ 30.6     $        98.4    $     23.9   $ 152.9

As shown in the assets under management table above, client cash inflows totaled $10.0 billion while client cash outflows totaled $14.4 billion for the three months ended March 31, 2009. The net flows for the quarter occurred across a broad range of product offerings in each of our distribution channels, with no individual cash inflow or outflow having a material impact on our revenue or expenses.

The operating segment analysis presented in the following table is based on average assets under management. For the Mutual Fund distribution channel, average assets under management represent an average of the daily net assets under management. For the Institutional and High Net Worth distribution channels, average assets under management represent an average of the assets at the beginning and end of each calendar quarter during the applicable period. We believe that this analysis

more closely correlates to the billing cycle of each distribution channel and, as such, provides a more meaningful relationship to revenue.

                                              For the Three Months
                                                Ended March 31,
      (dollars in millions, except as
      noted)                                  2008           2009       % Change
      Average assets under management
      (in billions)(1)
      Mutual Fund                           $     57.3     $     32.2         (44 )%
      Institutional                              170.0          103.9         (39 )%
      High Net Worth                              30.3           24.9         (18 )%

          Total                             $    257.6     $    161.0         (38 )%

      Revenue
      Mutual Fund                           $    134.8     $     68.3         (49 )%
      Institutional                              160.1           82.3         (49 )%
      High Net Worth                              40.1           27.9         (30 )%

          Total                             $    335.0     $    178.5         (47 )%

      Net Income
      Mutual Fund                           $     12.7     $      4.6         (64 )%
      Institutional                               15.4            1.2         (92 )%
      High Net Worth                               3.1            0.3         (90 )%

          Total                             $     31.2     $      6.1         (80 )%

      EBITDA(2)
      Mutual Fund                           $     31.2     $     14.9         (52 )%
      Institutional                               47.4           27.4         (42 )%
      High Net Worth                              10.0            6.9         (31 )%

          Total                             $     88.6     $     49.2         (44 )%

º (2)
º EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. Our use of EBITDA, including reconciliation to cash flow from operations, is described in greater detail in "Liquidity and Capital Resources-Supplemental Liquidity Measure." For purposes of our distribution channel operating results, expenses not incurred directly by Affiliates have been allocated based on the proportion of aggregate cash flow distributions reported by each Affiliate in the particular distribution channel.

For the three months ended March 31, 2009, average assets under management were 5% higher than ending assets under management. Because of the various client billing methods described above (including billing based upon the value of assets under management at the beginning of the period, at the end of the period or daily average for the period), this variance between average assets under management and ending assets under management is unlikely to meaningfully affect future operating results.

Our revenue is generally determined by the level of our assets under management, the portion of our assets across our products and three operating segments, which realize different fee rates, and the recognition of any performance fees. As described in the "Overview" section above, performance fees are generally measured on absolute or relative investment performance against a benchmark. As a result, the level of performance fees earned can vary significantly from period to period and these fees may not necessarily be correlated to changes in assets under management.

Our total revenue decreased $156.5 million (or 47%) in the three months ended March 31, 2009, as compared to the three months ended March 31, 2008, primarily from a 38% decrease in average assets under management. This decrease in average assets under management resulted principally from the decline in global equity markets and negative net client cash flows. Unrelated to the change in assets under management, performance fees in the three months ended March 31, 2009 declined as compared to the three months ended March 31, 2008 (1% of revenue for the three months ended March 31, 2009 and 9% of revenue for the three months ended March 31, 2008).

The following discusses the changes in our revenue by operating segments.

Mutual Fund Distribution Channel

Our revenue in the Mutual Fund distribution channel decreased $66.5 million (or 49%) in the three months ended March 31, 2009 as compared to the three months ended March 31, 2008, while average assets under management decreased 44%. This decrease in average assets under management resulted principally from the decline in global equity markets and negative net client cash flows. Unrelated to the change in assets under management, our performance fees in the three months ended March 31, 2009 declined as compared to the three months ended March 31, 2008.

Institutional Distribution Channel

Our revenue in the Institutional distribution channel decreased $77.8 million (or 49%) in the three months ended March 31, 2009 as compared to the three months ended March 31, 2008, while average assets under management decreased 39%. This decrease in average assets under management resulted principally from the decline in global equity markets and negative net client cash flows. Unrelated to the change in assets under management, our performance fees in the three months ended March 31, 2009 declined as compared to the three months ended March 31, 2008.

High Net Worth Distribution Channel

Our revenue in the High Net Worth distribution channel decreased $12.2 million (or 30%) in the three months ended March 31, 2009 as compared to the three months ended March 31, 2008, while average assets under management decreased 18%. This decrease in average assets under management resulted principally from the decline in global equity markets, partially offset by our 2008 investment in Gannet Welsh & Kotler, LLC.

Operating Expenses

    The following table summarizes our consolidated operating expenses:

                                              For the Three Months
                                                Ended March 31,
     (dollars in millions)                    2008           2009       % Change
     Compensation and related expenses      $    151.1     $     84.2         (44 )%
     Selling, general and administrative          52.8           32.5         (38 )%
     Amortization of intangible assets             8.4            8.1          (4 )%
     Depreciation and other amortization           2.8            3.2          14 %
     Other operating expenses                      5.4            5.8           7 %

     Total operating expenses               $    220.5     $    133.8         (39 )%

The substantial portion of our operating expenses is incurred by our Affiliates, the majority of which is incurred by Affiliates with revenue sharing arrangements. For Affiliates with revenue sharing arrangements, an Affiliate's Operating Allocation percentage generally determines its operating expenses. Accordingly, our compensation expense is impacted by increases or decreases in each Affiliate's revenue and the corresponding increases or decreases in each Affiliate's respective Operating Allocation. During the three months ended March 31, 2009, approximately $26.7 million (or 32%) of our consolidated compensation expense was attributable to our Affiliate management partners. The percentage of revenue allocated to operating expenses varies from one Affiliate to another and may also vary within an Affiliate depending on the source or amount of revenue. As a result, changes in our aggregate revenue may not impact our consolidated operating expenses to the same degree.

Compensation and related expenses decreased 44% in the three months ended March 31, 2009, as compared to the three months ended March 31, 2008, primarily as a result of the relationship between revenue and operating expenses at Affiliates, which experienced decreases in revenue, and accordingly, reported lower compensation expenses. This decrease was also attributable to decreases in holding company incentive compensation and share-based compensation of $3.1 million and $2.6 million in the three months ended March 31, 2009, as compared to the three months ended March 31, 2008, respectively. These decreases were partially offset by a $4.3 million increase in aggregate Affiliate expenses resulting from our new Affiliate investment in 2008.

Selling, general and administrative expenses decreased 38% in the three months ended March 31, 2009, as compared to the three months ended March 31, 2008, as a result of decreases in sub-advisory and distribution expenses attributable to a decline in assets under management at our Affiliates in the Mutual Fund distribution channel and a $5.6 million decrease in sub-advisory and administrative costs related to performance fees. The decrease was also . . .