Asset Management Finance LLC’s investment structure is based on Revenue Share Interests ("RSIs") that were developed by AMF to provide upfront capital to asset management firms or their principals in exchange for a fixed percentage of top-line revenue for a finite period of time. The term of the RSI is flexible and can be as short as 7 years or as long as 20 years.
AMF’s investments effectively transfer business risk to AMF during the term of the revenue sharing arrangement, without ever shifting ownership.
The amount of capital advanced depends on a number of variables, including:
- The term of the revenue share
- The percentage of gross revenue purchased
- Historical and anticipated asset growth and volatility
- Asset mix and fee stability
- Qualitative factors such as the management team and client diversity
Using RSIs, asset managers can access significant risk-sharing capital without sacrificing autonomy or ownership. Managers can now effectively avoid many of the disruptions and pitfalls that traditionally accompany a search for liquidity, allowing them to focus on performance, brand building and creating franchise value.