ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS

3. ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS

Acquisition of Strategic Partners Fund Solutions

On August 5, 2013, Blackstone completed its acquisition of Strategic Partners Fund Solutions, a secondary private fund of funds business, which resulted in an increase in Goodwill of $83.8 million and an increase in Intangible Assets, primarily comprising contractual rights to earn future fee income, of $57.9 million. Goodwill arising from the acquisition has been allocated to the Private Equity segment.

Acquisition of Harbourmaster

On January 5, 2012, Blackstone completed the acquisition of all of the outstanding share capital of Harbourmaster Capital (Holdings) Limited (“Harbourmaster”), an Island of Jersey entity, in accordance with the sale and purchase agreement entered into on October 6, 2011. The fair value of consideration transferred, comprised entirely of cash, was €181.4 million ($232.0 million). Harbourmaster is a European secured bank loan manager based in Dublin, Ireland. Harbourmaster manages various credit products including CLO vehicles.

The following is a summary of the estimated fair values of assets acquired and liabilities assumed for the Harbourmaster acquisition:


Purchase Price—Cash	$	232,044

Fair Value of Assets Acquired and Liabilities Assumed
Assets
Cash	$	75,072
Investments in CLOs		9,305
Accounts Receivable		9,329
Other Assets		17,651
Intangible Assets		142,221

		253,578
Liabilities Assumed
Accounts Payable, Accrued Expenses and Other Liabilities		21,534

Net Assets Acquired	$	232,044

Harbourmaster’s results from the date of acquisition have been included in the Credit segment.

The Partnership incurred $2.1 million of acquisition-related costs which were expensed as incurred and are reflected within General, Administrative and Other in the Consolidated Statements of Operations.

Goodwill and Intangible Assets

Goodwill has been allocated to each of the Partnership’s five segments as follows: Private Equity ($778.3 million), Real Estate ($421.7 million), Hedge Fund Solutions ($172.1 million), Credit ($346.4 million) and Financial Advisory ($68.9 million).

The carrying value of goodwill was $1.8 billion as of December 31, 2013 and $1.7 billion as of December 31, 2012. As of December 31, 2013 and 2012, the Partnership evaluated that it was not more likely than not that the fair value of its operating segments was less than their respective carrying values.

Intangible Assets, Net consists of the following:


	December 31,
	2013			2012
Finite-Lived Intangible Assets / Contractual Rights	$	1,594,128		$	1,536,244
Accumulated Amortization		(1,033,380	)		(937,709	)

Intangible Assets, Net	$	560,748		$	598,535

Changes in the Partnership’s Intangible Assets, Net consists of the following:


	Year Ended December 31,
	2013			2012			2011
Balance, Beginning of Year	$	598,535		$	595,488		$	779,311
Amortization Expense		(95,671	)		(139,174	)		(207,591	)
Acquisitions		57,884			142,221			23,768

Balance, End of Year	$	560,748		$	598,535		$	595,488

Amortization of Intangible Assets held at December 31, 2013 is expected to be $102.3 million, $95.8 million, $85.6 million, $46.5 million, and $46.5 million for each of the years ending December 31, 2014, 2015, 2016, 2017 and 2018, respectively. Blackstone’s intangible assets as of December 31, 2013 are expected to amortize over a weighted-average period of 7.4 years.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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