Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 20, 2024

MORNINGSTAR, INC.

(Exact name of registrant as specified in its charter)

Illinois	000-51280	36-3297908
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

22 West Washington Street
Chicago, Illinois	60602
(Address of principal executive offices)	(Zip Code)

(312) 696-6000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common stock, no par value	MORN	The Nasdaq Stock Market LLC

Item 7.01.

Regulation FD Disclosure.

On June 20, 2024, Morningstar, Inc., an Illinois corporation (“Morningstar”) and AssetMark, Inc., a California corporation and wholly owned subsidiary of AssetMark Financial Holdings, Inc. ("AssetMark") issued a joint press release announcing the entry into an Asset Purchase Agreement, pursuant to which AssetMark will acquire all of the client advisory agreements associated with Morningstar’s U.S. turnkey asset management platform, on the terms and conditions contained therein (the “Transaction”). A copy of the joint press release and questions and answers regarding the Transaction (“Investor Q&A”) are attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference and shall be deemed furnished and not filed for purposes of this Current Report on Form 8-K.

Caution Concerning Forward-Looking Statements

This Current Report on Form 8-K, including the document incorporated by reference herein, contains forward-looking statements as that term is used in the Private Securities Litigation Reform Act of 1995, including statements regarding the Transaction. These statements are based on our current expectations about future events or future financial performance. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and often contain words such as "consider,” “estimate,” “forecast,” “future,” “goal,” “designed to,” “maintain,” “may,” “objective,” “ongoing,” “could,” “expect,” “intend,” “plan,” “possible,” “potential,” “anticipate,” “believe,” “predict,” “continue,” “strategy,” “strive,” “will,” “would,” "determine," "evaluate," or the negative thereof, and similar expressions. These statements involve known and unknown risks and uncertainties that may cause the events we discuss not to occur or to differ significantly from what we expect. For us, these risks and uncertainties include, among others:

failing to close, or achieve the anticipated economic or other benefits of, the Transaction on a timely basis or at all;

failing to maintain and protect our brand, independence, and reputation;

failure to prevent and/or mitigate cybersecurity events and the failure to protect confidential,

compliance failures, regulatory action, or changes in laws applicable to our credit ratings operations, investment advisory, environmental, social, and governance (ESG), and index businesses;

failing to innovate our product and service offerings or anticipate our clients’ changing needs;

the impact of artificial intelligence (AI) and related new technologies on our business, legal, and regulatory exposure profile and reputation;

failure to detect errors in our products or failure of our products to perform properly due to defects, malfunctions or similar problems;

failing to recruit, develop, and retain qualified employees;

prolonged volatility or downturns affecting the financial sector, global financial markets, and the global economy and its effect on our revenue from asset-based fees and credit ratings business;

failing to scale our operations and increase productivity in order to implement our business plans and strategies;

liability for any losses that result from errors in our automated advisory tools or errors in the use of the information and data we collect;

inadequacy of our operational risk management, business continuity programs and insurance coverage in the event of a material disruptive event;

failing to efficiently integrate and leverage acquisitions and other investments, which may not realize the expected business or financial benefits, to produce the results we anticipate;

failing to maintain growth across our businesses in today's fragmented geopolitical, regulatory and cultural world;

liability relating to the information and data we collect, store, use, create, and distribute or the reports that we publish or are produced by our software products;

the potential adverse effect of our indebtedness on our cash flows and financial and operational flexibility;

challenges in accounting for tax complexities in the global jurisdictions we operate in could materially affect our tax obligations and tax rates; and

failing to protect our intellectual property rights or claims of intellectual property infringement against us.

A more complete description of these risks and uncertainties can be found in our filings with the Securities and Exchange Commission (“SEC”), including our most recent Reports on Form 10-K and 10-Q. If any of these risks and uncertainties materialize, our actual future results and other future events may vary significantly from what we expect. We do not undertake to update our forward-looking statements as a result of new information, future events, or otherwise, except as may be required by law. You are advised to review any further disclosures we make on related subjects, and about new or additional risks, uncertainties, and assumptions in our future filings with the SEC on Forms 10-K, 10-Q, and 8-K.

Item 9.01.

Financial Statements and Exhibits.

(d)          Exhibits:

Exhibit No.		Description

99.1		Joint Press Release, dated as of June 20, 2024

99.2		Investor Q&A, dated as of June 20, 2024

104		The cover page from this Current Report on Form 8-K formatted in Inline XBRL (included as Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MORNINGSTAR, INC.

Date: June 20, 2024	By:	/s/ Jason Dubinsky
	Name:	Jason Dubinsky
	Title:	Chief Financial Officer

Exhibit 99.1

AssetMark to Enter Strategic Alliance with Morningstar Wealth, Acquire Assets from TAMP Business

Concord, CA – June 20, 2024 – Wealth management platform AssetMark, Inc., a wholly owned subsidiary of AssetMark Financial Holdings, Inc. and a Registered Investment Adviser (collectively “AssetMark”), today announced a strategic alliance with Morningstar Wealth, a division of independent investing insights firm Morningstar, Inc. (Nasdaq: MORN).

As part of the alliance, AssetMark will acquire approximately $12 billion in assets from the Morningstar Wealth Turnkey Asset Management Platform (“TAMP”). Financial advisors and clients on Morningstar Wealth’s TAMP will have access to AssetMark’s platform, which provides industry-leading service, advisor technology, business consulting, and a carefully curated set of investment strategists. The account migration process will be designed to be seamless, as it will generally not require additional new client paperwork and clients’ performance histories will be maintained.

Additionally, financial advisors currently working with AssetMark will gain access to a wide range of model portfolios and separately managed accounts managed by the Morningstar Investment Management team, which has over $290 billion of assets under management and advisement (“AUMA”) globally. Morningstar Wealth will join the AssetMark platform as a third-party strategist and continue to expand its lineup of investment services.

“Morningstar has a rich heritage of providing comprehensive investment insights and services to advisors and financial professionals around the globe,” said Michael Kim, Chief Executive Officer of AssetMark. “This relationship represents best-in-class firms strategically aligning to provide innovative solutions and high-quality service to financial advisors and their clients.”

“Our alliance with AssetMark marks a significant milestone for our business. AssetMark has a long track record of providing financial advisors with the service, tools, and investments they need to build a thriving practice, and we look forward to making our models accessible to more advisors,” said Daniel Needham, President of Morningstar Wealth. “We are aligning our efforts with a clear vision to combine the strengths of our unique capabilities, enabling the advisors we support to serve investors more effectively.”

AssetMark is an experienced acquirer and integrator with a strong track record of executing transactions that enhance the value it provides to advisors and empowers them to serve their clients more holistically and efficiently. In 2021, the firm acquired a global provider of SaaS-based financial planning solutions, and, in 2022, acquired a leading provider of wealth management technology solutions to RIAs, enterprises and asset managers.

This transaction was approved by the Boards of Directors of both AssetMark and Morningstar, Inc. and is expected to close in the second half of 2024, subject to regulatory approval, necessary consents, and other customary closing conditions.

About AssetMark Financial Holdings, Inc.

AssetMark Financial Holdings, Inc. (“AFHI”) operates a wealth management platform whose mission is to help financial advisors and their clients. Together with our affiliates AssetMark Trust Company, Voyant and Adhesion Wealth Advisor Solutions, we serve advisors at every stage of their journey with flexible, purpose-built solutions that champion client engagement and drive efficiency. Our ecosystem of solutions equips advisors with services and capabilities that would otherwise require significant investments of time and money and aims to deliver better investor outcomes by enhancing their productivity, profitability, and client satisfaction.

AFHI announced in April 2024 that it signed a definitive agreement to be acquired by GTCR, a leading private equity firm with substantial investment expertise in financial technology, wealth and asset management, which is subject to customary closing conditions and required regulatory approvals and is expected to close in the fourth quarter of 2024. Consent to the transaction described in this press release was also provided by GTCR.

Founded in 1996, AFHI has over 1,000 employees and the AssetMark platform serves over 9,200 financial advisors and over 257,000 investor households. As of March 31, 2024, the company had $116.9 billion in platform assets.

AssetMark, Inc. is a Registered Investment Adviser with the U.S. Securities and Exchange Commission.

About Morningstar Wealth

Morningstar Wealth is a global organization dedicated to empowering both advisor and investor success. Our extensive range of offerings includes the Morningstar International Wealth Platform (TAMP), model portfolios managed by the Morningstar Investment Management team ($294 billion in assets under management and advisement*), Morningstar Office (portfolio management software), ByAllAccounts (data aggregation and enrichment), Morningstar Investor (individual investor platform) and Morningstar.com.

*Includes AUMA for advisory services offered by certain Morningstar subsidiaries that are authorized in the jurisdictions in which they operate to provide investment management and advisory services

About Morningstar Inc.

Morningstar, Inc. is a leading provider of independent investment insights in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and solutions that serve a wide range of market participants, including individual and institutional investors in public and private capital markets, financial advisors and wealth managers, asset managers, retirement plan providers and sponsors, and issuers of fixed-income securities. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $294 billion in AUMA as of March 31, 2024. The Company operates through wholly- or majority-owned subsidiaries in 32 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on X (formerly known as Twitter) @MorningstarInc.

Media Contacts:

AssetMark

Alaina.kleinman@assetmark.com

Morningstar Wealth

newsroom@morningstar.com

Exhibit 99.2

Morningstar Wealth and AssetMark Strategic Alliance

Investor Q&A

June 20, 2024

What is happening?

AssetMark and Morningstar have entered into an agreement in which AssetMark will acquire approximately $12 billion in assets from the Morningstar Wealth Turnkey Asset Management Platform (TAMP). Financial advisors and clients on Morningstar Wealth’s TAMP will be able to have their accounts transitioned to AssetMark’s platform, which provides industry-leading service, advisor technology, business consulting, and a carefully curated set of investment strategists.

Financial advisors currently working with AssetMark will gain access to a wide range of model portfolios and SMAs managed by the Morningstar Investment Management team, which has over $290 billion of assets under management and advisement globally. Morningstar Wealth will join the AssetMark platform as a third-party strategist and continue to expand its lineup of investment services that meet the needs of advisors and their clients.

Why is Morningstar doing this deal?

This alliance allows each party to lean into its relative strengths: Morningstar Wealth in leveraging our data and research to deliver a full spectrum of investment products, and AssetMark in providing clients with a best-in-class advisor experience.

The Morningstar Wealth TAMP was launched in 2001. The cost of maintaining and improving it is significant, and scale is important for success. In the U.S., we believe the best way to scale our business is to reach more clients with our investment products, and to allow others like AssetMark to own the technology platform.

The alliance is expected to bring our professionally managed investments to more advisors across the U.S. in a way that leans into our strengths and supports profitable, long-term growth.

How is the transaction structured?

Under the terms of the agreement, AssetMark will make an upfront payment to Morningstar at closing. Morningstar has the potential to receive an additional payment tied to the transition of clients and assets to the AssetMark platform during the 12-month period post-closing, plus upside opportunities for attracting new assets to the AssetMark platform after that time.

What are the Morningstar Wealth product implications?

After the transaction closes later this year, we will begin to sunset our U.S. TAMP. We remain committed to Morningstar Wealth as a growth driver for the company over the long term, and our goal is to continue to build assets in investment strategies distributed on third-party platforms as well as on our International Wealth Platform to support

the segment’s revenue growth and improved profitability. Other offerings under Morningstar Wealth, including Office, ByAllAccounts, Investor, and international products, will also continue operating as usual.

With the transaction, we will have a focused investment management business in the U.S. without the complexity of a legacy platform, which has faced secular headwinds. We’ll also focus on our International Wealth platform, which came out of our 2022 acquisition of Praemium's international operations. In the UK, in particular, we are gaining share as a challenger with growth in line with our expectations. We've also had success cross-selling Morningstar Investment Management products to existing clients on the International Wealth platform, creating a significant opportunity for growth.

Why is AssetMark the right fit?

We share a common culture and ambition to empower advisor growth and investor success.

What is the expected financial impact for the Morningstar Wealth segment?

We expect to see a reduction in revenue post-closing from fees related to our TAMP. We also expect to maintain certain operating costs (and incur other one-time costs) through the transition period which will wind down as clients and assets transfer to AssetMark. Once the 12-month transition period has concluded, we expect to see a positive run-rate impact on adjusted operating income for Morningstar Wealth, as planned cost reductions will more than offset lower revenue.

How does this change your proposition for advisors and wealth managers?

Advisors are central to our mission of empowering investor success. Morningstar has a long history of supporting advisors and wealth managers directly and indirectly to deliver personalized advice through our content, technology, and investment products. Today we serve approximately 300,000* advisors directly through our proprietary data, APIs, investment strategies, or workflow software such as Advisor Workstation, and we serve another estimated 125,000 unique advisors indirectly by integrating our data, strategies, managed accounts, and capabilities with third parties.

As we look ahead in North America, we are leaning into the parts of the advisor workflow where we believe the clarity of Morningstar’s data and research intelligence adds the most value. That’s primarily in proposal creation, investment research, investment management, and

Morningstar Wealth and AssetMark Strategic Alliance Investor Q&A

retirement services. We see good growth opportunities with independent advisors as well as broker dealers in these areas.

For other parts of the advisor workflow, we’ve been making it easier to team with third parties, both on our own platform and on others’. Advisor Workstation, for example, recently integrated with iCapital to enable side-by-side reviews of traditional and alternative investments and with Luma Financial Technologies to bring users structured product data and analytics. In the U.S., our newly announced alliance with AssetMark is the latest example of how we’re teaming up to support other parts of the advice journey.

In our international markets, we will do all this but also continue to operate and invest in the fast-growing International Wealth Platform to support advisors’ end-to-end workflow.

*Previously disclosed numbers of advisor clients have not included Direct Compass users or advisors who directly access data or APIs outside of our software products.

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations about future events or future financial performance. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and often contain words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “prospects,” or “continue.” These statements involve known and unknown risks and uncertainties that may cause the events we discuss not to occur or to differ significantly from what we expect. More information about factors that could affect Morningstar’s business and financial results are in our filings with the SEC, including our most recent reports on Forms 8-K, 10-K and 10-Q. Morningstar undertakes no obligation to publicly update any forward-looking statements as a result of new information, future events, or otherwise, except as required by law.

Cover	Jun. 20, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jun. 20, 2024
Entity File Number	000-51280
Entity Registrant Name	MORNINGSTAR, INC.
Entity Central Index Key	0001289419
Entity Tax Identification Number	36-3297908
Entity Incorporation, State or Country Code	IL
Entity Address, Address Line One	22 West Washington Street
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60602
City Area Code	312
Local Phone Number	696-6000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, no par value
Trading Symbol	MORN
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false