10-K: Silvercrest Reports Mixed 2025 Results Amid Market Shifts

Silvercrest Asset Management Group Inc. reported a 1.3% revenue increase to $125.3 million in 2025, but net income declined significantly by 48.7% to $8.06 million, driven by increased expenses and net client outflows.

Summary

• Total revenue for the year ended December 31, 2025, increased by 1.3% to $125.3 million, up from $123.7 million in 2024.
• Net income decreased by 48.7% to $8.059 million in 2025, compared to $15.709 million in 2024.
• Net income attributable to Silvercrest shareholders fell to $4.885 million in 2025 from $9.535 million in 2024.
• Adjusted EBITDA declined by 24.9% to $19.619 million in 2025, with the Adjusted EBITDA margin decreasing to 15.7% from 21.1% in 2024.
• Assets under management (AUM) grew modestly by 1.4% to $37.0 billion as of December 31, 2025, from $36.5 billion in 2024.
• The company experienced net client outflows of $1.6 billion in 2025, a worsening from $0.6 billion in outflows in 2024.
• Total expenses rose by 9.4% to $116.0 million in 2025, primarily due to a $7.3 million increase in compensation and benefits and a $2.7 million increase in general and administrative expenses.
• Market appreciation contributed $2.1 billion to AUM growth in 2025, a slower rate of increase (5.7%) compared to $3.8 billion (10.4%) in 2024.
• The company continued its share repurchase program, buying back 1,537,778 shares for approximately $23.127 million under the 2025 program.
• The credit facility term loan maturity was extended to June 18, 2028, with potential for further extensions to June 18, 2030.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a concerning report due to the significant decline in net income and adjusted EBITDA, coupled with increasing client outflows and expenses, despite modest AUM growth and strong long-term investment performance.

Positives

• Total revenue increased by 1.3% to $125.3 million in 2025, indicating continued top-line growth.
• Family office services revenue showed strong growth, increasing by 10.0% to $4.767 million in 2025.
• Assets under management (AUM) continued to grow, reaching $37.0 billion by the end of 2025, a 1.4% increase from the prior year.
• The company maintains a high client retention rate, averaging 98% since 2006, demonstrating strong client relationships.
• Several proprietary equity strategies, such as Global Value Opportunity Composite (38.1% return), Emerging Markets ADR (46.5%), Focused International Value (43.3%), and International Multi Cap Value (39.7%), delivered strong composite returns for the year ended December 31, 2025.
• The company successfully extended its credit facility term loan maturity to June 18, 2028, and the revolving credit facility to June 18, 2026, providing continued financial flexibility.
• Management confirmed the effectiveness of disclosure controls and procedures and internal control over financial reporting as of December 31, 2025.

Negatives

• Net income decreased significantly by 48.7% to $8.059 million in 2025 from $15.709 million in 2024.
• Adjusted EBITDA declined by 24.9% to $19.619 million in 2025, and the Adjusted EBITDA margin decreased from 21.1% to 15.7%.
• Total expenses increased by 9.4% to $116.0 million in 2025, outpacing revenue growth.
• Compensation and benefits expense, the largest expense, increased by $7.3 million or 9.5% in 2025.
• The company experienced net client outflows of $1.6 billion in 2025, an increase from $0.6 billion in outflows in 2024, indicating challenges in attracting or retaining client capital.
• Market appreciation, while positive, slowed to a 5.7% rate of increase in total AUM in 2025, compared to 10.4% in 2024.
• Several proprietary equity strategies, including Large Cap Value (-4.0%), Small Cap Value (-4.0%), Smid Cap Value (1.1%), and Small Cap Opportunity (-1.5%), underperformed their respective benchmarks in the one-year period ended December 31, 2025.
• Net cash provided by operating activities decreased from $21.590 million in 2024 to $18.607 million in 2025.
• Net cash used in financing activities increased substantially from $21.549 million in 2024 to $39.493 million in 2025, largely due to increased share repurchases.

Risks

• Volatile market conditions could adversely affect the business by reducing AUM value or causing client withdrawals, materially reducing revenues and exposing the company to litigation risks.
• Inability to maintain the current fee structure due to poor investment performance, competitive pressures, or changes in business mix could materially affect profit margins.
• Historical returns of existing investment strategies may not be indicative of future results, and strategies may not obtain attractive returns in the short-term or during certain market periods.
• Deriving a substantial portion of revenues from a limited number of strategies and clients, with contracts terminable on no notice, poses a concentration risk.
• The long-only, equity investment focus of most strategies exposes the company to greater risk than competitors with non-equity or hedged positions.
• Growth of AUM may be constrained by the unavailability of appropriate investment opportunities, particularly in small and small-mid cap strategies.
• The extensive fundamental research process may result in missed investment opportunities and reduce strategy performance.
• International and Global Equity Strategies involve foreign currency exchange, tax, political, social, and economic uncertainties and risks.
• Loss of key investment professionals or senior management could materially affect the business and client retention.
• Intense competition for qualified personnel may hinder the ability to attract and retain talent.
• Efforts to establish new investment teams and strategies or enter new lines of business may be unsuccessful and negatively impact results and reputation.
• Due diligence processes for strategic investments or acquisitions may not reveal all relevant facts, leading to unknown liabilities.
• The significant growth experienced historically may be difficult to sustain, straining infrastructure and investment teams.
• Rights of Class B unit holders may give rise to conflicts of interest.
• The company's ability to pay taxes and expenses, including tax receivable agreement payments, may be limited by its holding company structure.
• Obligations under the tax receivable agreement could be significant and may be accelerated or exceed actual benefits realized.
• Being deemed an investment company under the Investment Company Act could make it impractical to continue business as contemplated.
• Providing a broad range of services to Silvercrest Funds and family office services may expose the company to liability.
• Extensive and rapidly changing regulation, including increased regulatory scrutiny and new laws (e.g., MiFID II, cybersecurity rules), imposes numerous obligations and costs.
• Regulatory investigations, even without fines, could harm reputation and lead to client losses.
• Ongoing trade negotiations and potential for further regulatory reform (e.g., U.S. tariffs, economic sanctions) may negatively impact portfolio companies and investment strategies.
• Increasing scrutiny from stakeholders on ESG matters, including reporting, exposes the company to reputational and other risks.
• Failure to comply with client investment guidelines and legal limitations could result in damage awards and AUM loss.
• Operational risks, including cyber-attacks, employee misconduct, and improper disclosure of personal data, may disrupt business, cause losses, or damage reputation.
• Failure to properly address conflicts of interest could harm reputation, business, and results of operations.
• The investment management industry faces substantial litigation risks.
• Reductions in business sourced through third-party distribution channels or poor reviews could materially reduce revenue.
• A change of control could result in termination of sub-investment advisory and investment advisory agreements.
• Ineffective risk-management techniques may lead to unanticipated losses.
• Reliance on prime brokers, custodians, and other agents subjects the company to risks related to their execution and solvency.
• Incurring indebtedness or issuing senior equity securities exposes the company to additional risks, including leverage.
• Future financings could dilute existing stockholders or place restrictions on business operations.
• Newly enacted laws or regulations and future changes in business taxation may impact the effective tax rate or adversely affect business.
• The market price and trading volume of Class A common stock may be volatile, leading to rapid and substantial losses for stockholders.
• Future issuances and sales of Class A common stock could lower the stock price and dilute ownership.
• Requirements of being a public company may strain resources and distract management.
• Anti-takeover provisions could discourage changes of control favored by stockholders.
• Lack of or unfavorable research by securities or industry analysts could cause stock price and trading volume to decline.
• Fluctuations in AUM amount and mix, particularly a shift toward lower-fee strategies, may negatively impact revenues and income.

Future Outlook

The company expects to continue its growth strategy through organic client acquisition, strategic hires, and acquisitions, while expanding its institutional market presence. It plans to invest in brand building through advertising and public relations. The ability to attract clients will depend on educating them about classic value investment strategies, providing exceptional service, and delivering attractive long-term returns. The company anticipates that distributions to Silvercrest L.P. principals will remain a material use of cash resources, and it intends to continue paying quarterly cash dividends to Class A common stockholders, funded by distributions from Silvercrest L.P. The company is evaluating the impact of several new FASB accounting standards effective in future periods.

Management Comments

• We seek to create, build and maintain an environment that encourages innovation and original thought and apply this fresh thinking to the needs of our clients and our firm.
• We seek to attract, motivate and retain talented and ambitious professionals who share a passion for the investment business and an antipathy for corporate bureaucracy and office politics.
• We seek to conduct ourselves in all our dealings as highly ethical, responsible and competent professionals who always place our clients financial interests ahead of our own.
• We seek to encourage and nurture an entrepreneurial, collegial and action-oriented business culture in which fun is inevitable and decisions are generally consensual.
• We believe our record of growth is a direct result of our demonstrated record of delivering excellent performance together with highly personalized service to our clients.
• We believe additional acquisitions will allow us to extend our geographic presence nationally.
• We firmly believe that our business structure represents a better approach and will permit us to greatly expand our business on our existing platform.
• We continue to see the opportunity for greater penetration with our current clients in future years.
• We believe we will become the partner of choice for more such firms (acquisition targets).
• We estimate that the new business that we get directly as a result of our advertising finances its cost.
• We believe that it is impossible for a single manager to perform all forms of investing equally well.
• We believe that we have sufficient cash from our operations to fund our operations and commitments for the next twelve months.

Industry Context

StockSavvy.ai notes that Silvercrest's mixed 2025 results, characterized by modest AUM growth but declining net income and increased client outflows, reflect a challenging environment for wealth management firms. While the firm's focus on ultra-high net worth individuals and institutional investors, coupled with a strong client retention rate, provides a stable base, the industry faces intense competition and fee compression. The increase in operating expenses, particularly compensation, is a common trend as firms vie for top talent. The shift in market appreciation rates and continued net client outflows suggest that while the firm's investment strategies have historically outperformed, maintaining this edge and attracting new capital in a volatile market remains critical. The firm's strategic acquisitions and expansion of family office services align with broader industry trends towards comprehensive wealth solutions and geographic diversification, as seen with larger diversified financial institutions and multi-family offices.

Comparison to Industry Standards

• Silvercrest's average client retention rate of 98% since 2006 is exceptionally high, significantly exceeding typical industry averages for wealth management firms, which can range from 85-95% depending on client segment and firm type.
• The compound annual growth rate (CAGR) in AUM of 25% since inception (2002) is robust, indicating strong long-term growth compared to many established asset managers that often see single-digit AUM growth rates.
• The firm's proprietary equity strategies have generally outperformed their respective benchmarks since inception, such as Large Cap Value (9.6% vs Russell 1000 Value 8.2%) and Equity Income (10.8% vs Russell 3000 Value 8.8%), demonstrating competitive investment performance over the long term.
• However, some strategies, like Small Cap Value (-4.0% vs Russell 2000 Value 12.6%) and Small Cap Opportunity (-1.5% vs Russell 2000 Index 12.8%), underperformed their benchmarks in the one-year period ended December 31, 2025, which could be a point of concern for short-term performance comparisons against peers like T. Rowe Price or Fidelity's specialized funds.
• The decline in Adjusted EBITDA margin from 21.1% in 2024 to 15.7% in 2025 suggests a compression in profitability, which is below the margins of some highly efficient, larger-scale asset managers that can achieve 30-40% margins, but comparable to boutique firms facing rising operational costs.
• The net client outflows of $1.6 billion in 2025, following $0.6 billion in 2024, indicate a challenge in asset gathering, contrasting with some industry leaders like BlackRock or Vanguard that consistently report net inflows, albeit with different business models and client bases.

Corporate Governance

Legal Proceedings

• Currently, there are no material legal proceedings pending or threatened against the company.

Related Party Transactions

• The company provided investment advisory services to various affiliated investment funds (Silvercrest Funds), earning management fee income of $3.703 million and performance fees/allocations of $0.874 million in 2025.
• As of December 31, 2025, the company was owed $0.326 million from its various funds.
• The company earned advisory fees of $1.920 million in 2025 from assets managed on behalf of certain employees.
• As of December 31, 2025, the company was owed approximately $0.161 million from certain employees.

Stakeholder Impact

• **Shareholders (Class A Common Stockholders):** Experienced a significant decline in net income per share and diluted earnings per share. The ongoing share repurchase program could provide some support to share price, but increased expenses and client outflows are negative. Dividends were paid at $0.82 per share in 2025.
• **Principals (Class B Unit Holders):** Distributions to partners of Silvercrest L.P. totaled $5.964 million in 2025. The tax receivable agreement creates a future payment obligation from Silvercrest to these principals, which is expected to be substantial.
• **Employees:** Compensation and benefits expense increased by 9.5% in 2025, indicating continued investment in employee compensation. Equity incentive plans provide opportunities for ownership and long-term alignment. The company emphasizes a culture of low employee turnover and professional development.
• **Clients (Ultra-High Net Worth Individuals & Institutional Investors):** The company's high client retention rate (98%) suggests satisfaction with service and performance. However, net client outflows indicate some clients are reallocating assets. The performance of proprietary strategies, while strong long-term, showed mixed short-term results, which could influence client decisions.
• **Creditors:** The company was in compliance with covenants under its credit facility as of December 31, 2025, and has extended its term loan and revolving credit facility maturities, indicating stable credit management.

Next Steps

• Continue to execute the business plan for attracting ultra-high net worth clients, focusing on referrals and trust-building.
• Expand awareness of the company and its capabilities through marketing materials and customized solicitations for newly-formed wealth.
• Continue to recruit and hire senior portfolio managers with significant client relationships and successful investment professionals.
• Expand presence in major wealth centers, both domestic and international, through organic growth and acquisitions.
• Continue to invest in establishing the Silvercrest brand through selective advertising and public relations.
• Increase the provision of family office services to both broaden relationships with existing clients and attract potential clients.
• Regularly assess risks associated with information security threats, monitor information systems for vulnerabilities, and test those systems.

Key Dates

Recommendation

While Silvercrest Asset Management Group Inc. demonstrates strong long-term client retention and a history of outperforming benchmarks, the significant decline in net income and adjusted EBITDA in 2025, coupled with increasing client outflows and expenses, presents a concerning short-term picture. The continued share repurchase program and extended credit facility provide some stability, but the firm needs to reverse the trend of client outflows and improve profitability margins. A 'hold' recommendation is appropriate as investors should monitor whether the company can effectively manage its cost structure and re-accelerate asset inflows in the coming periods to justify a more positive outlook.

Keywords

Wealth Management, Asset Management, SEC Filing, 10-K, Financial Advisory, Family Office Services, AUM, Investment Performance, Equity Strategies, Fixed Income Strategies, Client Retention, Share Repurchase, Financial Results, Corporate Governance, Risk Factors, Cybersecurity, Regulation, Public Company, SAMG