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Business Combinations | 9 Months Ended
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Sep. 30, 2024
Business Combinations [Abstract] |
Business Combinations | NOTE 5 Business Combinations During the nine months ended September 30, 2024, Brown & Brown acquired all of the stock of seven insurance intermediaries, purchased assets and assumed certain liabilities of eleven insurance intermediaries, and purchased four books of business (customer accounts) for a total of 22 acquisitions. Additionally, adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last twelve months as permitted by Accounting Standards Codification Topic 805 — Business Combinations (“ASC 805”). The recorded purchase price for all acquisitions includes an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in the fair value of earn-out obligations are recorded in the Condensed Consolidated Statements of Income when incurred. The fair value of earn-out obligations is based on the present value of the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Condensed Consolidated Financial Statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805. For the nine months ended September 30, 2024, adjustments were made within the permitted measurement period for the following: an increase to total consideration of $9 million, an increase to fiduciary assets and fiduciary liabilities of $20 million, increase to non-controlling interest of $6 million, increase in amortizable intangible assets of $11 million, decrease to other net assets of $3 million and net increase in goodwill of $7 million. These measurement period adjustments have been reflected as current period adjustments in the nine months ended September 30, 2024 in accordance with the guidance in ASU 2015-16 “Business Combinations.” The measurement period adjustments had no effect on earnings or cash in the current period. Subsequent to September 30, 2024, the Company completed one acquisition with total consideration in excess of $50 million. The maximum purchase price for the acquisition is $74 million. Certain disclosures have not been presented as the effect of the acquisitions were not material to the Company's financial results. The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired through the nine months ended September 30, 2024 as of the date of each acquisition and adjustments made during the measurement period of the prior year acquisitions.
(in millions) |  | Other (1) |
Cash paid |  | $ | 145 |
Other payable |  |  | 14 |
Recorded earn-out payable |  |  | 28 |
Total consideration |  |  | 187 |
Maximum potential earn-out payable |  |  | 54 |
Allocation of purchase price: |  |  |
Cash and equivalents |  |  | 6 |
Fiduciary cash |  |  | 21 |
Fiduciary receivables |  |  | 1 |
Other current assets |  |  | 7 |
Goodwill |  |  | 127 |
Purchased customer accounts and other |  |  | 60 |
Other assets |  |  | 2 |
Total assets acquired |  |  | 224 |
Fiduciary liabilities |  |  | (22 | )
Other current liabilities |  |  | (2 | )
Deferred income tax, net |  |  | (7 | )
Total liabilities assumed |  |  | (31 | )
Acquired non-controlling interest |  |  | (6 | )
Net assets acquired |  | $ | 187 |
(1) The other column represents a summarization of current year acquisitions with total consideration of less than $50 million per acquisition and adjustments from prior year acquisitions that were made within the permitted measurement period. The weighted average useful life of purchased customer accounts is 15 years. Acquisition Earn-Out Payables As of September 30, 2024 and 2023, the fair values of the estimated acquisition earn-out payables were re-evaluated and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820 - Fair Value Measurement. The resulting additions, payments, and net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables were as follows:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
(in millions) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Balance as of the beginning of the period |  | $ | 169 |  |  | $ | 231 |  |  | $ | 249 |  |  | $ | 252 |
Additions to estimated acquisition earn-out payables |  |  | 8 |  |  |  | 11 |  |  |  | 28 |  |  |  | 50 |
Payments for estimated acquisition earn-out payables |  |  | (38 | ) |  |  | (11 | ) |  |  | (135 | ) |  |  | (74 | )
Subtotal |  |  | 139 |  |  |  | 231 |  |  |  | 142 |  |  |  | 228 |
Net change in earnings from estimated acquisition earn-out payables: |  |  |  |  |  |  |  |  |  |  |  |
Change in fair value on estimated acquisition earn-out payables |  |  | (9 | ) |  |  | 28 |  |  |  | (15 | ) |  |  | 23 |
Interest expense accretion |  |  | 1 |  |  |  | 2 |  |  |  | 6 |  |  |  | 7 |
Net change in earnings from estimated acquisition earn-out payables |  |  | (8 | ) |  |  | 30 |  |  |  | (9 | ) |  |  | 30 |
Foreign currency translation adjustments during the year |  |  | 6 |  |  |  | (3 | ) |  |  | 4 |  |  |  | — |
Balance as of September 30, |  | $ | 137 |  |  | $ | 258 |  |  | $ | 137 |  |  | $ | 258 |
Of the $137 million of estimated acquisition earn-out payables as of September 30, 2024, $73 million was recorded as accounts payable and $64 million was recorded as other non-current liabilities. As of September 30, 2024, the maximum future acquisition contingency payments was $460 million. Six of the estimated acquisition earn-out payables include provisions with no maximum potential earn-out amount. The amount recorded for these acquisitions as of September 30, 2024 is $4 million. The Company deems a significant increase to this amount to be unlikely.

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