What's in a name?
AMG stands for Aufrecht, Melcher and Grossaspach, which is as good a reason as any for shortening it to AMG.
The first two words are the surnames of Hans Werner Aufrecht and Erhard Melcher, two employees in the Daimler-Benz Development department who decided to set up in business building race engines on their own in 1967 after Mercedes decided to withdraw (not for the first time) from motorsport.
Grossaspach, a small town in south-west Germany, is where Aufrecht was born. It has no other connection with AMG, since the company has never been based there.