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Acquisitions and Dispositions | 9 Months Ended
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Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract] |
Acquisitions and Dispositions | Acquisitions and DispositionsThe Company’s acquisitions have been accounted for as business combinations. Net assets and results of operations are included in the Company’s consolidated financial statements commencing at the respective purchase closing dates. In connection with acquisitions, the Company records the estimated values of the net tangible assets and the identifiable intangible assets purchased, which typically consist of customer relationships, developed technology, trademarks and non-compete agreements. The valuation of purchased intangible assets involves significant estimates and assumptions. The Company estimates the fair value of purchased intangible assets, primarily using the income approach, by determining the present value of future cash flows over the remaining economic life of the respective assets. The significant estimates and assumptions used in this approach include the determination of the discount rate, economic life, future revenue growth rates, expected account attrition rates and earnings margins. Refinement and completion of final valuation of net assets acquired could affect the carrying value of tangible assets, goodwill and identifiable intangible assets. The Risk and Insurance Services segment completed three acquisitions during the first nine months ended September 30, 2021: •April – Marsh McLennan Agency ("MMA") acquired PayneWest Insurance, Inc., a Montana-based full-service broker providing business insurance, surety, employee benefits and personal insurance services to companies and individuals, and The Pryor Group, LLC, a Texas-based full-service broker providing business insurance with a specialty in quick service restaurants and the personal lines of franchise owners. •September – MMA acquired Vaaler Insurance, Inc., a North Dakota-based insurance broker providing business insurance, employee health and benefits, and personal lines solutions, with specialized expertise in the construction, education, and healthcare industries. Total purchase consideration for acquisitions made during the nine months ended September 30, 2021 was $546 million, which consisted of cash paid of $405 million and deferred purchase consideration and estimated contingent consideration of $141 million. Contingent consideration arrangements are based primarily on earnings before interest, tax, depreciation and amortization ("EBITDA") or revenue targets over a period of two to four years. The Company also paid $84 million of deferred purchase consideration and $72 million of contingent consideration related to acquisitions made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment until purchase accounting is finalized. The following table presents the preliminary allocation of purchase consideration to the assets acquired and liabilities assumed during 2021 based on the estimated fair values for the acquisitions as of their respective acquisition dates:
Acquisitions through September 30, 2021 |  |  |
(In millions) |  |  |
Cash | $ | 405 |  |  |
Estimated fair value of deferred/contingent consideration | 141 |  |  |
Total consideration | $ | 546 |  |  |
Allocation of purchase price: |  |  |
Cash and cash equivalents | $ | 4 |  |  |
Accounts receivable, net | 32 |  |  |
Fixed assets, net | 5 |  |  |
Other intangible assets | 190 |  |  |
Goodwill | 374 |  |  |
Total assets acquired | 605 |  |  |
Current liabilities | 27 |  |  |
Other liabilities | 32 |  |  |
Total liabilities assumed | 59 |  |  |
Net assets acquired | $ | 546 |  |  |
The purchase price allocation for assets acquired and liabilities assumed is based on estimates that are preliminary in nature and subject to adjustments, which could be material. Any necessary adjustments must be finalized during the measurement period, which for a particular asset, liability, or non-controlling interest ends once the acquirer determines that either (1) the necessary information has been obtained or (2) the information is not available. However, the measurement period for all items is limited to one year from the acquisition date. The estimation of fair value requires numerous judgments, assumptions and estimates about future events and uncertainties, which could materially impact these values, and the related amortization, where applicable, in the Company’s results of operations. The following chart provides information about intangible assets acquired during 2021:
Intangible assets through September 30, 2021 (In millions) |  | Amount |  | Weighted Average Amortization Period
Client relationships |  | $ | 176 |  |  | 13.7 years
Other |  | 14 |  |  | 3.8 years
|  | $ | 190 |  |  |
The consolidated statements of income include the results of operations of acquired companies since their respective acquisition dates. The consolidated statements of income for the three and nine month periods ended September 30, 2021 include revenue of approximately $38 million and $73 million and operating income of $3 million and $4 million for acquisitions made in 2021. The consolidated statements of income for the three and nine month periods ended September 30, 2020 included approximately $52 million and $115 million of revenue, respectively, and operating loss of $8 million and operating income of $3 million, respectively, related to acquisitions made in 2020. Dispositions During the first nine months of 2021, the Company sold certain businesses, primarily in the U.S. and the U.K., for cash proceeds of approximately $84 million and recognized a net gain of approximately $50 million, primarily related to the commercial networks business in the U.K. that provided broking and back-office solutions for small independent brokers. Prior-Year Acquisitions The Risk and Insurance Services segment completed seven acquisitions during 2020: •January – MMA acquired Momentous Insurance Brokerage Inc., a California-based full-service risk management and employee benefits firm specializing in high net worth private client services and insurance solutions for the entertainment industry, and Ironwood Insurance Services, LLC, an Atlanta-based broker that provides commercial property/casualty insurance, employee benefits, and private client solutions to mid-size businesses and individuals across the U.S. •April – MMA acquired Assurance Holdings, Inc., an Illinois-based full service brokerage providing business insurance, employee benefits, private client insurance, and retirement services to businesses and individuals across the U.S. •June – MMA acquired Nico Insurance Services, Inc., a California-based agency providing employee benefits solutions to groups and individuals. •December – MMA acquired Heritage Insurance Services, Inc., a Kentucky-based full service broker that provides commercial property and casualty and personal lines primarily in the trucking and transportation industry, Inspro Insurance, Inc., a Nebraska-based full service broker that provides commercial property and casualty insurance, personal lines and employee benefits services, and Compass Financial Partners, LLC, a North Carolina-based retirement consulting and investment advisory firm. Total purchase consideration for acquisitions made during the nine months ended September 30, 2020 was approximately $742 million, which consisted of cash paid of $579 million and deferred purchase and estimated contingent consideration of $163 million. Contingent consideration arrangements are based primarily on earnings before interest, tax, depreciation and amortization ("EBITDA") or revenue targets over a period of two to four years. For the first nine months of 2020, the Company also paid $60 million of deferred purchase consideration and $101 million of contingent consideration related to acquisitions made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized. Prior year dispositions In the first nine months of 2020, the Company sold certain businesses primarily in the U.S., U.K. and Canada for cash proceeds of approximately $93 million. Pro-Forma Information The following unaudited pro-forma financial data gives effect to the acquisitions made by the Company during 2021 and 2020. In accordance with accounting guidance related to pro-forma disclosures, the information presented for acquisitions made in 2021 is as if they occurred on January 1, 2020 and reflects acquisitions made in 2020 as if they occurred on January 1, 2019. The unaudited pro-forma information adjusts for the effects of amortization of acquired intangibles. The unaudited pro-forma financial data is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved if such acquisitions had occurred on the dates indicated, nor is it necessarily indicative of future consolidated results.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions, except per share data) | 2021 |  | 2020 |  | 2021 |  | 2020
Revenue | $ | 4,587 |  |  | $ | 4,019 |  |  | $ | 14,730 |  |  | $ | 12,955 |
Net income attributable to the Company | $ | 538 |  |  | $ | 322 |  |  | $ | 2,345 |  |  | $ | 1,655 |
Basic net income per share attributable to the Company | $ | 1.06 |  |  | $ | 0.63 |  |  | $ | 4.62 |  |  | $ | 3.27 |
Diluted net income per share attributable to the Company | $ | 1.05 |  |  | $ | 0.63 |  |  | $ | 4.57 |  |  | $ | 3.24 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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