ALTI

Good afternoon. At this time, I would like to welcome everyone to AlTi's first quarter 2026 earnings conference call. During the call, your lines will remain in a listen-only mode. After the speaker's remarks, there will be a question and answer session. I would like to advise all parties that this conference call is being recorded, and a replay of the webcast is available at AlTi's investor relations website. Now, at this time, I will turn things over to Lily Arteaga, Head of Investor Relations for AlTi. Please go ahead.

Good afternoon, and welcome to AlTi Global's first quarter 2026 earnings conference call. On today's call, we will hear prepared remarks from Nancy Curtin, interim Chief Executive Officer and Global Chief Investment Officer, and Mike Harrington, Chief Financial Officer. Nancy and Mike, along with Kevin Moran, our President and Chief Operating Officer, will be available to answer questions during the Q&A session. Before we begin, I would like to remind everyone that certain statements made during the call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments made during the prepared remarks and in response to questions. Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, expect, future, intend, may, planned, and will, or similar terms.

Because these forward-looking statements involve both known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these statements. For a discussion of these risks and uncertainties that could cause actual results to differ, please refer to AlTi's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent quarterly report on Form 10-Q. AlTi assumes no obligation or responsibility to update any forward-looking statements. During this call, some comments may include references to non-GAAP financial measures. Full reconciliations can be found in our earnings presentation and our related SEC filings. With that, I'd like to turn the call over to Nancy Curtin. Nancy.

Thank you, Lily, and good afternoon, everyone. As I reflect on my first 6 weeks as interim CEO, what stands out most is the strength of our platform and the opportunity ahead. AlTi operates at the high end of the wealth management market, serving ultra-high-net-worth families and institutions whose needs are increasingly global, complex, and long-term in nature. That positioning is differentiated, highly relevant, and well-aligned with the needs of clients. These clients that are navigating generational change in a more uncertain market environment. During these first few weeks, my focus has been on working with the leadership team to maintain execution, sharpen priorities, and ensure the organization remains aligned. While we continue to refine how we deliver against our plans, our strategic priorities remain unchanged. Driving organic growth, pursuing inorganic opportunities where they are strategic to our goals. Operating as one global firm.

Building capacity for our people, and importantly, improving profitability in a disciplined and sustainable way. The first quarter of 2026 unfolded against a volatile market backdrop. Geopolitical uncertainty, sharp increases in energy prices, lower equity markets, currency fluctuations, and shifting expectations around interest rates. These factors all contributed to heightened dispersion and pressure on asset values across the industry. In that environment, the resilience of our client base and investment approach is especially important. Our clients are ultra-high-net-worth families and institutions with long-term investment horizons, well-diversified balance sheets, and generally limited near-term liquidity needs, which support our disciplined decision-making through periods of market stress. At the portfolio level, our allocations are designed with diversification and downside awareness in mind and typically exhibit lower beta relative to the broader markets.

In addition, our positioning in energy and energy infrastructures and technology, both in the U.S. and emerging markets, allowed us to outperform more volatile markets. While market movements can affect reported AUM quarter to quarter, as we saw during this past quarter, the underlying client relationships, engagement levels, and long-term strategies remain fundamentally resilient. As we look forward, our job is to continue to strengthen our firm by investing in capacity and growth while streamlining complexities and costs. We are investing thoughtfully in this platform, improving how we operate, removing inefficiencies, creating more capacity for advisors to serve our clients, and thus drive organic growth. With that context, let me briefly highlight a few points from our first quarter results. AlTi generates $73 million in total revenue, representing 28% growth compared to the same period last year.

Recurring management and advisory fees totaled $52 million, up 16% year-over-year, and continue to represent the majority of our revenue base. Reflecting the stability and recurring nature of our business model. We also saw meaningful contributions from investment distributions of $21 million. The incentive portion of those distributions was $19 million in Q1 2026, compared to $10 million in Q1 2025. Adjusted EBITDA for the quarter was $15 million, up 21% compared to the prior year quarter, largely driven by the revenue increase. Overall revenue in the quarter held up well, particularly given, as mentioned, the heightened geopolitical uncertainty and market volatility. Our results benefited from the stability of our core revenue streams, and we also saw a contribution from the incentive income driven by the strong performance of our external managers. That said, we are very clear about where improvement is needed.

Meaningfully increasing organic revenue growth is critical and is a primary focus across the organization. We are intent on driving stronger, more consistent momentum as we move forward. We also continue to review inorganic opportunities in our core strategic markets to catalyze further growth and help us scale the business. On the expense side, costs remain too high, and addressing that is a near-term priority. We are laser-focused on reducing and simplifying our cost structure. While the reported numbers do not yet fully reflect the progress through the ongoing strategic review, our underlying expense trajectory is improving. These efforts are aimed at better aligning the business with its core strengths and ensuring our financial results more accurately reflect its long-term earnings power. Finally, with respect to the strategic review process, the committee continues its work. As of today, there's nothing further to report. We will provide updates as appropriate.

With that, I'll turn the call over to Mike to walk through the financials in more detail. Mike?

Thanks, Nancy, and good afternoon, everyone. As Nancy outlined, the quarter was shaped by a challenging market environment with asset values impacted by volatility. I'll walk through the financials in more detail, focusing on the composition of revenue, the dynamics affecting expenses, and the contribution for our investment interest. Assets under management ended the quarter at $49 billion, up 9% year-over-year, driven by strong investment performance and the acquisition of Kontora. This growth was achieved despite market-driven depreciation during the quarter, reflecting the geopolitical uncertainty, higher energy prices, currency movements, and shifting interest rate expectations referenced earlier. In the first quarter, AlTi generated $73 million total revenue, representing a 28% increase versus the prior year.

Recurring management and advisory fees totaled $52 million, up 16% year-over-year, reflecting the Kontora acquisition and higher average billable AUM, partially offset by market volatility during the first quarter. Distributions from investments were also a meaningful contributor, totaling $21 million in the first quarter, up 75% year-over-year. The incentive portion, which reflects performance earned by external managers in the prior year, totaled $19 million in the first quarter 2026. Of that amount, approximately $18 million was attributable to Zevity, the European long-short strategy, which generated a 15.3% return in 2025. As we've discussed previously, these distributions play an important role in diversifying our cash flow and supporting results in periods where market-driven AUM pressure impacts recurring revenues. Before turning to expenses, I want to briefly level set on the dynamics this quarter.

As noted last quarter, actions we've taken are resulting in improved cost control and underlying expense reductions. That progress is being obscured by temporary and non-operational items, including costs associated with the strategic review and the recent management restructuring. As Nancy noted, we remain intensely focused on driving further cost reductions. Lowering the expense base is central to improve the financial profile of the business, and we expect the benefits of these efforts to be demonstrated in the second half of the year. For the quarter, reported operating expenses increased by $18 million year-over-year to $84 million, driven primarily by higher compensation costs related to the recent management restructuring, acquisition-related earn-outs, and the Kontora acquisition.

In addition, operating expenses reflected non-compensation costs driven primarily by increased professional fees and G&A expenses, including costs associated with the strategic review process, as well as foreign exchange and other non-recurring operational costs. These impacts were partially offset by lower bad debt expense compared to the prior year, along with reduced spending in areas such as technology, occupancy, and marketing, reflecting progress under our zero-based budgeting initiatives. On a normalized basis, excluding non-recurring and non-cash items, operating expenses were $58 million compared to $45 million in the first quarter of 2025, reflecting many of the items mentioned above. Importantly, on a sequential basis, normalized expenses declined by $19 million, primarily due to lower compensation costs from the absence of the Tiedemann Arbitrage incentive bonus, alongside continued progress in simplifying the organization and lowering the cost base.

As our zero-based budgeting initiatives continue to advance, we expect these benefits to become more visible in reported results. As noted earlier, we continue to incur strategic review related costs, primarily reflected in professional fees, which are expected to persist until the process is complete. For the quarter, adjusted EBITDA was $15 million, up 21% compared to the prior period and up $4 million sequentially, or 32%. The sequential improvement primarily reflects lower cost as well as the impact of higher margin incentive fees from our investment holdings in external managers. Adjusted EBITDA margin was 20% compared to 13% in the prior quarter. Other income for the quarter was $19 million, driven primarily by valuation-related items, including gains on investments and liabilities.

Finally, on a GAAP basis, we reported net income from continuing operations of $8 million for the quarter, an increase of $4 million from the prior period. With that, I'll turn it back to Nancy for her closing remarks.

Thank you, Mike. As Interim CEO, I've had the opportunity to step even more deeply into the business over the past several weeks. What stands out most to me is the strength and resilience of AlTi's platform and client base. In a dynamic and uncertain market environment, our clients have remained highly engaged, grounded in long-term objectives, and focused on partnering with us across wealth and investment management solutions. Building on the important work completed in 2025, we enter 2026 with a simpler organization, improving cost discipline and a business model anchored in high recurring revenues and long-duration client relationships. I'm encouraged by the momentum we're seeing across the firm and excited about the opportunities ahead, particularly as we build the foundation to drive organic growth while continuing to execute on cost efficiency with focus and discipline.

Thank you for your continued interest and support, and we look forward to updating you on our progress in the quarters ahead. I'll now turn the call back to the operator for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment please while we poll for questions. First question comes from Wilma Burdis from Raymond James. Please proceed with your questions, Wilma.

Hi, this is Chris on for Wilma. Can you provide any updates on the AUM given the market rebound in recent weeks?

It's Nancy. Yeah. I think we did not sell during the period of the conflict and war, so we maintained our positioning, which had a combination of energy, infrastructure and energy-related positioning plus technology. As the markets have turned around, we've been able to nicely participate in the recovery. I don't have an exact AUM figure. We can certainly follow up and give that to you. I would say overall, just as we did last year, we did not panic during the particular, you know, event and crisis that we're continuing to live through in a world, and we remained invested. That's been a good thing to, as I said, participate in the recovery.

Great. Thank you. Do you expect this level of incentive income from third-party managers to be a good run rate, or should it normalize in a less volatile environment?

It's hard to say because remember, their strategies are not, you know, just beta market-oriented. Ours aren't either, I should say, because we have quite a lot of alternative expertise. You know, in a, in a long-short manager, it's hard to say. You know, obviously, Zevity had very good performance in Q1, and we'll have to see how it comes out in Q2. It's hard to say at this point. The numbers we've seen initially look encouraging, but we need to see how the quarter ends.

Okay. Makes sense. One more question. Do you have any idea of when we could expect the strategic review and therefore elevated expenses to come down to a more normalized level?

I think on the strategic review, a large amount of those expenses hopefully are probably behind us. Obviously, if any proposal comes to the company, to the Board, the Board will need to evaluate it consistent with its fiduciary responsibilities. It's hard to be sure that all the costs are behind us. Broadly, you know, we have a, you know, a very laser-focused, you know, really just evaluating opportunities that come as opposed to a strategic review process in place at the moment.

Chris, this is Mike. I would just say, and Mike, stated specifically, just I think we should expect those costs to continue in the second quarter at least, and maybe bleed into the third. When we get in the back half of this year, that should be behind us, contingent on the process being complete. The costs we're incurring right now should start to diminish back half of the year.

Great. Thank you.

Thank you very much. We have no further questions. At this time, I'd like to hand the call to Nancy for closing remarks. Thank you so much.

I just want to thank everyone for listening to the earnings call today, participating and asking such excellent questions. We look forward to seeing you next quarter, as we continue to implement our strategy focused on both cost discipline and organic growth ahead. Thank you for your time today.

Thank you. Ladies and gentlemen, that does conclude today's conference. Thank you very much for joining us. You may now disconnect your lines.

Good morning. At this time, I would like to welcome everyone to AlTi's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would like to advise all parties that this conference call is being recorded, and a replay of the webcast is available on AlTi's Investor Relations website. Now at this time, I will turn things over to Lily Arteaga, Head of Investor Relations for AlTi. Please go ahead.

Good morning to everyone on the call today. Today, we will hear from Michael Tiedemann, Nancy Curtin and Mike Harrington. Nancy and Mike Harrington, along with Kevin Moran, our President and COO, will be available to take questions during Q&A. I would like to remind everyone that certain statements made during the call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments made during the prepared remarks and in response to questions. Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, expect, future, intend, may, planned and will or similar terms. Because these forward-looking statements involve both known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these statements. For a discussion of the risks and uncertainties that could cause actual results to differ, please refer to AlTi's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. AlTi assumes no obligation or responsibility to update any forward-looking statements. During this call, some comments may include references to non-GAAP financial measures. Full reconciliations can be found in our earnings presentation and our related SEC filings. With that, I'd like to turn the call over to Michael Tiedemann.

Thank you, Lily, and good morning, everyone. Before we begin, I would like to reflect on where AlTi stands today, 3 years since our listing. In early 2023, we entered the public markets with a clear ambition to build the premier global wealth management platform focused on the fastest-growing segment of the wealth landscape, the ultra-high net worth segment. I feel immense pride in what we've accomplished over this period and believe our team has created the most complete high-end investment solution set for large and complex families that exists. Today, AlTi delivers full-service global wealth management solutions in 19 cities across 9 countries. Since our listing, we've grown our AUM in our wealth platform by 70% while maintaining industry-leading client retention rates above 95%. We are established in the highest end of the wealth market with clients that average assets in excess of $50 million, a number that continues to rise as our prospects grow in size over time. Our team and the platform we have built is positioned to perform over both the near and long term. Now I want to turn to an important update, which also was announced earlier this morning with our earnings press release. After more than 25 years leading the company, I will be stepping down as CEO and Nancy Curtin, our Global Chief Investment Officer, will become Interim CEO. I've known Nancy for many years, and her leadership has been pivotal to the success of our business. I am confident the company is in capable hands and will continue to be supporting Nancy to ensure a smooth transition. Importantly, we've built a world-class team uniquely able to serve the most sophisticated client base in wealth management. I have immense respect and admiration for my colleagues all over the world for the dedication they have to serving our clients. Their relentless collaboration defines our corporate culture as a firm. And lastly, I would be remiss not to thank our incredible and loyal client base who've placed their trust in AlTi over the years, allowing us to serve their families across generations. With that, I will turn the call over to Nancy and the leadership team for their prepared remarks and today's subsequent Q&A session. Thank you.

Thank you, Michael. I'm grateful for the opportunity to step into this role and to work with our talented professionals and global leadership team as we continue to drive the business forward. I also want to personally thank Michael for his many years of dedication and focus, which has laid an excellent foundation to advance the company into its next chapter. As he mentioned, AlTi was built to serve the most sophisticated segment of the wealth market. This segment is looking for what we can deliver, holistic and independent approach to complex wealth management where client needs span family governance and education, tax and structuring and multiple generations and jurisdictions. We've been doing this for over 2 decades and are one of the few firms truly able to deliver customized solutions on a global basis. We're proud of what we've built. The same investment discipline and long-term client-centric approach also underpins how we serve clients on the platform today. Alongside our work with families, we have leveraged our institutional capabilities to build a leading global endowment and foundation or E&F business, using our institutional investment management platform and capabilities. This complementary and growing practice has grown to more than $8 billion in assets under management at year-end 2025, largely serving private and family foundations, and we view it as a natural extension of our wealth management business. Building on that foundation, growth across the platform has been strong. Since our listing, organic growth has been driven by both new client additions and continued expansion of existing relationships as families, endowments and foundations increase the scope of their engagement with AlTi over time. Over the past 3 years, we've generated over $9 billion of projected billable assets, including nearly $4 billion added in 2025 alone. Reflecting sustained demand from ultra-high net worth and institutional clients across our U.S. and international businesses. At the same time, we've been deliberate in where we focus the business. Over the past 3 years and especially in 2025, we have remained firmly focused on our core Wealth and Institutional Management business with continued emphasis on delivering excellence in client service. In parallel, we've taken meaningful steps to simplify the organization and address noncore costs, actions that are enabling continued investment in our platform and positioning earnings to scale over time as these initiatives progress. As part of that focus, a comprehensive strategic assessment led to the exit of our noncore international real estate business in 2025, eliminating the future costs and obligations associated with that platform. Complementing these efforts, we have adopted zero-based budgeting process as our budget methodology. Through the 2025 and 2026 process, ZBB has enabled us to identify approximately $20 million of recurring annual gross savings, with the majority expected to be realized by year-end 2026. Separately, our investments in alternative strategies continues to strengthen our capital and liquidity position and made a meaningful contribution to our results in 2025. Our interest in these internally and externally managed strategies provide a complementary source of cash flow to our core wealth and institutional management businesses and support future growth initiatives within that segment. With that context, I want to turn to our results highlights for the year. In 2025, AlTi generated $255 million in total revenues, representing 29% growth compared to 2024. Total revenues benefited from contributions from our alternative interest, while the core of our revenue base remained anchored in nearly $200 million of predictable recurring management fees. Adjusted EBITDA reached $35 million for the year. As we look ahead, we are increasingly excited by the opportunities to continue to grow organically while continuing to streamline the cost basis of the firm. With the platform now simplified following the restructuring of our noncore international real estate business, we expect our results to increasingly reflect the strong fundamentals of the company. In closing, I want to provide an update on our strategic review. As announced in December, a special committee was formed to review strategic options to maximize long-term value for shareholders. To date, the special committee has not received a proposal that it believes encapsulates the long-term value of the business, and it continues to evaluate a full range of alternatives with a clear focus on enhancing shareholder value informed by our clear strategy, strong management team and simplified platform. If any proposal received from any party, the committee will evaluate it consistently with its fiduciary duties. With that, I'll turn it over to Mike Harrington to walk through the financials. Mike?

Thanks, Nancy. We made significant progress in 2025, and we expect to see the benefits that progress in 2026. The exit of noncore activities now complete and the impact of zero-based budgeting beginning to show, we believe the strength of our business will become increasingly evident in the years ahead. Total assets under management reached $50 billion at year-end, up 10% year-over-year, driven by strong investment performance and the acquisition of Kontora. That growth was achieved despite a more muted market impact in the international business stemming from foreign exchange headwinds related to the U.S. dollar depreciation, given that growth assets within these portfolios are typically unhedged. For the full year 2025, AlTi generated approximately $255 million of total revenue, representing a 29% year-over-year growth. The increase was driven by robust AUM expansion, along with meaningful contributions from incentive fees, reflecting the strong investment performance throughout the year across the alternatives managers in which we hold ownership stakes. Fourth quarter revenue totaled $88 million, up 71% from the prior quarter, reflecting continued AUM growth and a $29 million contribution from incentive fees associated with the strong performance of the arbitrage strategy in 2025, which generated an 11.3% return for the year. Stepping back from the contribution of incentive fees in the year, the underlying strength of our business continues to be reflected in the growth of our recurring management fees. Management fees totaled nearly $200 million in the year, up 9% year-over-year and $53 million in the fourth quarter, up 14% compared to the same period in 2024, supported by sustained asset growth. Before turning to expenses, I want to highlight some important nuances in our financials. The results we're presenting today continue to reflect the lag in actions taken and costs incurred in 2025. And as a result, the operating leverage of the business is not yet visible. That said, revenue growth remains strong, and we are seeing benefits from zero-based budgeting in areas such as occupancy, systems and marketing. At this stage, however, those benefits are being offset in our reported results by discrete onetime items, including temporary costs associated with the strategic review process. We expect these costs to subside in the coming periods and allow the underlying expense trends to become clearer. For the full year, reported operating expenses increased by $72 million to $329 million. The increase was largely driven by higher compensation costs, inclusive of an approximately $14 million bonus accrued associated with the arbitrage incentive fee recorded in Q4, the integration of Kontora in 2025 and other onetime items related to the strategic review process, zero-based budgeting program and the exit of the international real estate business. On a normalized basis, excluding nonrecurring and noncash items as well as the arbitrage incentive fee bonus accrual, full year operating expenses were $205 million compared to $182 million in 2024. The increase primarily reflects higher compensation costs, including the effect of the Kontora acquisition, increased professional fees and G&A expenses driven partially by the strategic review process as well as foreign exchange and VAT. Beneath these temporary and noncore items, our cost structure is improving as zero-based budgeting initiatives continue to progress and noncore items roll off, we expect these improvements to come increasingly visible in our reported results. For the full year, adjusted EBITDA increased 45% to approximately $35 million, reflecting the contribution from incentive-related performance during the year. Adjusted EBITDA for the quarter was $11 million, nearly doubling sequentially, largely driven by the net contribution from the incentive fee. Adjusted EBITDA margins were 14% for the year and 13% for the quarter. On a GAAP basis, we reported a net loss of $155 million for the year and $10 million, $15 million for the quarter, driven largely by noncash nonrecurring items. For the full year, other loss was $31 million, primarily attributable to a $35 million impairment charge of the arbitrage fund recorded in Q3. In the fourth quarter, we recorded a loss of $8 million, reflecting fair value adjustments on certain items. Looking ahead, we expect 2026 to mark a turning point for the business. As initiatives continue to take hold, progress should become increasingly evident in our normalized results, supported by additional savings from optimizing office occupancy and completing the wind down of legacy technology and vendor contracts. As revenues continue to grow and the platform scales, the impact of zero-based budgeting and platform efficiencies should become clear, allowing the financial profile of the business to reflect its underlying strength. With a focused strategy, durable client relationships and a simplified operating model, we believe AlTi is well positioned to deliver sustained growth and increased profitability over time. And with that, I'll turn it back to Nancy Curtin for her closing remarks.

Thank you, Mike. 2025 was a critical year for AlTi. While we continue to grow our business and deliver for our clients, we also made necessary decisions to simplify the business, sharpen our focus and position the firm for long-term value creation. As a result, we entered '26 with a cleaner structure, a stronger operating model the platform aligned around recurring revenue wealth and investment management. Thank you for your continued interest and support. We look forward to updating you on our progress in the quarters ahead. I'm now turning it over to the operator for questions.

[Operator Instructions] And our first question will come from Wilma Burdis with Raymond James.

Could you provide a little bit more color on the decision to transition CEOs and just talk about what the search process looks like from here?

Well, first of all, well, it's Nancy, and thank you very much for your support of the company. I think it was a bit broken up, but I think you asked the question, can we give a little more color on the transition process? Is that right?

Yes.

Yes. Okay. Great. So it was a thoughtful discussion, as you can imagine, between the Board and management as part of AlTi's ongoing focus and next phase of growth. And I think we just decided it was the right time to appoint a new leader for AlTi's next chapter in growth ahead and continuing to execute our strategy. But I want to say upfront that while there's a change in leadership, obviously, myself our overall strategy of being a preeminent ultra-high net worth firm operating on a global basis with excellent client service, independent advice and all those characteristics that both Mike and I spoke to, that remains continuity, momentum and the strategy that's already in place is absolutely what we aim to continue to deliver on. And it might be helpful just to turn to Kevin, who's sitting next to me as well, and he can comment on it. Kevin and I are working side by side, and we look forward to the partnership together.

Thanks, Nancy. Will, I've joined -- I've spoken to you in the past on some of these calls. So as I think you know myself, Nancy, Mike and Tied, like the management team here at the firm has been together for a very long time. I've been with the firm for about 18 years. That's the case for many at the management level. So as Nancy says, we believe in the strategy, there will be continued execution on the go-forward strategy that Mike Tiedemann put in place 25 years ago when he launched what was at that point, Tiedemann Advisors. And we, as the management team, it's a very cohesive, long-tenured team, and we remain absolutely focused on continuing to grow and execute the business strategy that Nancy and Mike Tiedemann laid out in their remarks.

Great. And I think you made a few comments on the process on the call, but can you just give us an update? I mean it sounds like is this more of a pivot towards focusing on operating. Can you just talk a little bit more about how that all fits together?

So let me take. I think what you're saying again, straight line. I think the strategy of being the preeminent global leader executing in a marketplace that is growing with ultra-high net worth, huge intergenerational wealth transfer and our already existing excellent clients that we have in place remains unchanged. But let me turn to Kevin because a core part of that is, of course, growing our business organically and from time to time, opportunistically and strategically looking at inorganic, but there's nothing on the horizon at the moment. But also continuing to be mindful of ZBB, which is a core part of our cost discipline and process and continuing to think about how we scale the business. So let me turn to Kevin to pick up on that because he's really led that over the last couple of years.

Sure. Thanks, Nancy. So we're very focused, as we've talked about on previous calls, I think I'd like to talk again about today on further optimizing our cost structure. What we're really looking to do is make sure that our cost structure is as optimized as possible to allow us to continue to scale the business. So we're very focused on the cost structure. But at the same time, we're very focused on growth. So organic growth for us is really the hallmark of a really healthy business. So we're very focused on continuing to -- we think we have a terrific service model and one of the best platforms for servicing the ultra-high net worth client base that exists globally, certainly in the United States and elsewhere. So we're very confident in our ability to win business and bring on clients and service them in the best way possible in the industry. So that's on the growth side. Nancy said, we're uniquely positioned to also execute inorganic growth, both in the United States and elsewhere. So we have a just a terrific opportunity set in terms of both growing organically and inorganically. At the same time, we are really not taking our eye off the ball on the expense side. We're going to make investments. We're seeing that on the technology side. So we're making technology investments that we think will drive efficiencies over time. I think everything from mid to back office and even on the front office side, there's a lot to do in AI and technology initiatives. At the same time, looking to really streamline the rest of our non-comp costs. So we've been really proactive around occupancy as an example, and you're seeing that in the numbers. We're going to continue to make sure that we're rightsizing our occupancy expense. And then the major -- where you're going to see continued improvements is on tech spend. So I mentioned we're investing into technology. We are also actively managing the technology spend. So as some contracts were off, you'll see a continued improvement on the tech spend. And then professional fees, again, that's where Mike Harrington remarks talking about some of the noise that we've seen through from costs related to the strategic initiatives and elsewhere, as those onetime expenses come off, you also see improvement on the professional fees. So it's management team that's very focused on both the top line growth as well as bottom line improvement on the expense side.

Great. And then it look like you had pretty solid merger arbitrage performance in the quarter. Maybe give us a little bit more color on that.

So the merger arbitrage strategy has been operating for a very long time. 2025 had a strong year. So I think performance was up a little over 11% for the year, and that correlated to the improving management fees, which took based upon improving AUM growth as well as a strong incentive fee. As you know, the incentive fees for that are crystallized at the end of the year. So those -- based on the performance for the full year, we earned a pretty strong incentive fee for 2025. We don't have a view on 2026 because again, we don't know what performance will be for the strategy, but that strategy has a very long track record of doing pretty well in most market environments.

I guess I would just add to that, Wilma I mean, we'll have to see what happens, of course, with the conflict in the Middle East, but M&A activity is broadly picking up both the volume and value of transactions, and this represents a pretty ripe opportunity for the arbitrage strategy. So we'll see what happens this year, but it's a good [indiscernible] he manages to produce performance in all sorts of years, but I would say M&A activity, it looks like, again, assuming we get through the conflict will be a strong year in 2026.

Okay. Great. And it looks like there were some pretty solid additions in AUA. Can you just touch on that a little bit?

So I think you're seeing on the AUA growth, we did add Kontora acquisition, so was the acquisition of the German multifamily office that we completed last April that led to increased -- obviously, revenue -- our revenue numbers increased as a result of that transaction. But also, they have their business -- multifamily office, they have AUM and AUA. So you're seeing the uptick in the AUA really from that acquisition. Part of the business strategy behind that acquisition was over time to convert their AUA assets to AUM assets, which we have had a very long successful track record of be able to do with the rest of the business. That was really the main driver in the AUA uptick in 2025.

So I guess drilling into that a little bit more. I think there was some AUA that was added in 4Q. Just was curious on that.

I think what you're seeing there is just the typical sort of movement of client assets in and out of their portfolios. We provide holistic services across a client's entire network. So everything from real assets like real estate to investment assets. And again, Nancy and the investment team have done a terrific job of managing client portfolios. So I think there's nothing unusual. It's just as we -- particularly if we can bring on large clients, they may have at times very large AUA as opposed to AUM assets. Just think of AUA is really nonfinancial assets, just anything else in ultra-high net worth clients could own. So real estate, hardware collectibles, those would all be flowing into our AUA as opposed to our AUM. But it's really core to the service model for us to be able to oversee and report and manage and advise on both the AUA and the AUM.

Could you give us a little more color on the 13D that was filed by Allianz.

Yes. Thank you for that question, Wilma. So as you know, Allianz has been a strategic partner of the firm for the last 18 months, and they filed a 13D. We have no further insight into what their intentions or plans are. But from a regulatory perspective, if they have any plans to increase their engagement, they are required to file a 13D. They've been a trusted and excellent partner. And if they decide to move forward, and we don't have any visibility into that at this point, that would -- could be welcome. Of course, in any event, as you're well aware, we have a special committee of the Board of Directors -- and any kind of proposal about the company strategically would go into our special committee who is committed of the independent directors to delivering the value for shareholders and representing all shareholders of the company. So that's all I can say at the moment, but thank you for the question.

And then could you just give us a little bit more detail on ZBB, where you stand with that? What's to come? What else you're doing there?

Wilma, it's Kevin again. I can take that one, and Nancy or Mike may want to jump in. So zero-based budgeting is, I think, primarily one is the budgeting approach we're taking going forward. So the numbers -- the $20 million number that we talked about was based upon the zero-based budgeting approach that we used for the 2024 -- sorry, the 2025 budget. So of the $20 million, right, it's really -- it was across the entire scope of non-comp expenses. The expenses that we identified were expected to be realized over about 9 quarters going into the first quarter of 2027. The reason it's an extended period of time it's a lot of those expenses are subject to contracts. So think of anything from leases to technology vendors that as we identify and then we just don't renew the contract, we have to wait until the contract itself runs out. So what we saw in 2025 is really the noncontractual expenses. So what Nancy talked about or Mike Harrington we talked about things like marketing, travel and entertainment and tech expenses where we have contracts expiring in 2025. So that's what we've seen so far. Same thing with occupancy, we made a significant improvement in reducing our occupancy expense. So what we'll see in 2026 is continued cost reductions around technology and occupancy as we continue to move through leases and contracts that are expiring over the next 4 to 5 quarters.

Just following up on the earlier question on Allianz. Can you just remind us, it seems like I thought Allianz had a multiyear standstill. Can you just remind us where that stands, I guess, no pun intended.

Kevin take that, Kevin?

Yes. So when Allianz invested, they did have a standstill, so they would need Board approval or Board consent for us to waive the standstill. So standstill can be waived. They do have one in place. So they will discuss that with the special committee in terms of how to move forward if they wish to do so.

Makes a lot of sense. And then could you just give us a quick reminder of where you stand with capital and potential to grow, acquire new advisers or new platforms?

So that's a core part of our strategy. It's both organic, which is the priority, but of course, inorganic as well. Let me turn to Kevin on that. It's -- so he can talk about the funding that we have and sources we have to continue to allow us to pursue inorganic opportunities. Kevin?

Thanks, Nancy. So on the organic side, we don't see a need for funding to allow us to continue to execute on the organic growth initiatives. We have a terrific group of advisers and support staff business development teams globally to allow us to continue to pursue organic growth. We have -- in the event we identify an attractive sort of M&A opportunity or a larger lift out that would require capital. We have had discussions with capital providers and think that capital is readily available. For us, we can execute on a great idea, and we can show any capital provider, how accretive that transaction will be. So to sum it up on the organic side, we have -- we don't see a need for capital at this time to continue to execute. If and when we identify an inorganic opportunity, we are confident we'll be able to raise capital to fund and execute on that.

[Operator Instructions] And this now concludes our question-and-answer session. I would like to turn the floor back over to Nancy Curtin for closing comments.

Thank you very much for joining us on the call this morning. Of course, we look forward to sharing updates on our progress on our first quarter call, and thank you for the excellent questions. Very much appreciated, and thank you for your time.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.