Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

As of January 1, 2021, we underwent an internal reorganization in our Advisory Services and Global Workplace Solutions reportable segments (see Note 14 for further discussion). This changed the composition of our reporting units which resulted in the reallocation of $101.4 million of goodwill from our Advisory Services to our Global Workplace Solutions reportable segments as of January 1, 2021. Additionally, the change in composition of our reporting units was considered a triggering event for a quantitative test as of January 1, 2021. We determined that no impairment existed as the estimated fair values of our reporting units were in excess of their respective carrying values.

During the first quarter of 2020, as a result of the Covid-19 pandemic, we assessed at a reporting unit level whether any triggering events had occurred during the period that would require us to perform a quantitative impairment analysis of goodwill. As a result of this evaluation, we determined that there was a triggering event in our global investment management reporting unit (which falls within our Real Estate Investments segment) that required a quantitative test to be performed. In connection with this quantitative evaluation, we determined that this reporting unit’s goodwill was impaired and recorded a $25.0 million non-cash impairment charge during the first quarter.

Our annual assessment of goodwill and other intangible assets deemed to have indefinite lives has historically been completed as of the beginning of the fourth quarter of each year. We performed the 2021, 2020 and 2019 annual assessments as of October 1. During 2020, as part of our annual assessment, we identified a change in our reporting units due to an internal reorganization in our GWS segment. When we performed our required annual goodwill impairment review as of October 1, 2021, 2020 and 2019, we determined that no impairment existed as the estimated fair value of our reporting units was in excess of their carrying value.

The following table summarizes the changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020 (dollars in thousands):


	Advisory Services		Global Workplace Solutions		Real Estate Investments		Total
Balance as of December 31, 2019
Goodwill	$	3,302,218	$	899,506	$	620,275	$	4,821,999
Accumulated impairment losses	(761,448)		(175,473)		(131,585)		(1,068,506)
	2,540,770		724,033		488,690		3,753,493
Purchase accounting entries related to acquisitions	16,463		9,702		(7,984)		18,181
Impairment	—		—		(25,000)		(25,000)
Foreign exchange movement	30,107		28,589		16,239		74,935
Balance as of December 31, 2020
Goodwill	3,348,788		937,797		628,530		4,915,115
Accumulated impairment losses	(761,448)		(175,473)		(156,585)		(1,093,506)
	2,587,340		762,324		471,945		3,821,609
Reallocation	(101,390)		101,390		—		—
Purchase accounting entries related to acquisitions	77,616		1,167,678		—		1,245,294
Impairment	—		—		—		—
Foreign exchange movement	(26,520)		(32,836)		(12,372)		(71,728)
Balance as of December 31, 2021
Goodwill	3,298,494		2,174,029		616,158		6,088,681
Accumulated impairment losses	(761,448)		(175,473)		(156,585)		(1,093,506)
	$	2,537,046	$	1,998,556	$	459,573	$	4,995,175

During 2021, in addition to the Turner & Townsend Acquisition (see Note 4), we completed eight in-fill acquisitions: a U.S. firm that provides construction and project management services, a professional service advisory firm in Australia, a U.S. firm focused on investment banking and investment sales in the global gaming real estate market, a leading facilities management firm in the Netherlands, a workplace interior design and project management company in Singapore, a property management firm in France, a residential brokerage in the Netherlands, and an occupancy management company based in the U.S.

During 2020, we completed six in-fill acquisitions: leading local facilities management firms in Spain and Italy, a U.S. firm that helps companies reduce telecommunications costs, a technology focused project management firm based in Florida, a firm specializing in performing real estate valuations in South Korea, and a facilities management and technical maintenance firm in Australia.

Other intangible assets totaled $2.4 billion, net of accumulated amortization of $1.7 billion as of December 31, 2021, and $1.4 billion, net of accumulated amortization of $1.6 billion, as of December 31, 2020 and are comprised of the following (dollars in thousands):


	December 31,
	2021				2020
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Unamortizable intangible assets:
Management contracts	$	63,153			$	67,422
Trademarks	329,224				56,800

	392,377				124,222
Amortizable intangible assets:
Customer relationships	1,612,308		$	(667,668)	880,104		$	(603,866)
Mortgage servicing rights	1,005,357		(426,841)		927,525		(370,634)
Trademarks/Trade names	350,548		(126,468)		354,060		(111,595)
Management contracts	151,912		(137,906)		152,312		(145,612)
Covenant not to compete	73,750		(73,750)		73,750		(73,750)
Other	548,455		(292,647)		412,477		(251,080)
	3,742,330		(1,725,280)		2,800,228		(1,556,537)
Total intangible assets	$	4,134,707	$	(1,725,280)	$	2,924,450	$	(1,556,537)

Unamortizable intangible assets include management contracts identified as a result of the REIM Acquisitions relating to relationships with open-end funds, a trademark separately identified as a result of the 2001 Acquisition, a trade name separately identified in connection with the REIM Acquisitions and a trademark separately identified as part of the Turner & Townsend transaction.

Customer relationships relate to existing relationships acquired through acquisitions mainly in our Global Workplace Solutions segment, including $753.9 million identified as part of the Turner & Townsend transaction, that are being amortized over useful lives of up to 20 years.

Mortgage servicing rights represent the carrying value of servicing assets in the U.S. in our Advisory Services segment. The mortgage servicing rights are being amortized over the estimated period that net servicing income is expected to be received, which is typically up to 10 years. See Mortgage Servicing Rights discussion within Note 2 for additional information.

Definite-lived trademarks/trade names primarily comprise of a trademark identified as part of the 2019 Telford acquisition of approximately $26.7 million which is being amortized over 20 years and trademarks of approximately $280.0 million from 2015 GWS Acquisition which are being amortized over 20 years.

Management contracts consist primarily of asset management contracts relating to relationships with closed-end funds and separate accounts in the U.S., Europe and Asia that were separately identified as a result of the REIM Acquisitions. These management contracts are being amortized over useful lives of up to 13 years.

Other amortizable intangible assets mainly represent transition costs, which primarily get amortized to cost of revenue over the life of the associated contract. It also includes a backlog related intangible identified as part of Turner & Townsend transaction.

During the year ended December 31, 2020, we recorded non-cash impairment charges of $28.5 million in our Global Workplace Solutions segment related to amortizable trade name and customer relationships. In addition, we recorded non-cash impairment charges of $6.0 million in our Real Estate Investments segment (see Note 7).

During the year ended December 31, 2019, we recorded an intangible asset impairment of $89.8 million in our Real Estate Investments segment. This non-cash write-off related to intangibles acquired in the REIM Acquisitions, including unamortizable management contracts relating to relationships with open-end funds and the Clarion Partners trade name in the U.S., as well as amortizable management contracts relating to relationships with closed-end funds and separate accounts in the U.S.

Amortization expense related to intangible assets, excluding amortization of transition costs, was $276.5 million, $227.1 million and $225.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. The estimated annual amortization expense for each of the years ending December 31, 2022 through December 31, 2026 and thereafter approximates $309.8 million, $284.6 million, $248.5 million, $201.3 million and $161.4 million, respectively.