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Business Combinations, Goodwill and Other Intangible Assets | 6 Months Ended
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Jun. 30, 2016
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract] |
Business Combinations, Goodwill and Other Intangible Assets |
5. | BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
2016 Business Combinations Activity During the six months ended June 30, 2016, we completed 16 new acquisitions, as presented in the table below. These acquisitions reflect continued expansion of our annuity businesses while also more broadly growing scale in key regional markets across all business lines.
Acquired Company | Country | Service Line
Bill Goold Realty | Canada | Capital Markets & Hotels
Dazheng | China | Advisory, Consulting and Other
Procofin | Finland | Project & Development Services
CTH | France | Project & Development Services
Véronique Nocquet | France | Leasing
ACREST | Germany | Property & Facility Management
Morii Appraisal and Investment Consulting | Japan | Advisory, Consulting and Other
Cobertura SA | Portugal | Capital Markets & Hotels
Trussard Property Consultants | South Africa | Leasing
Big Red Rooster | United States | Project & Development Services
Colliers Baltimore | United States | Leasing/Property & Facility Management
Harry K. Moore | United States | Leasing
Huntley, Mullaney, Spargo & Sullivan, Inc. | United States | Capital Markets & Hotels
Merritt & Harris | United States | Project & Development Services
Strategic Advisory Group | United States | Advisory, Consulting and Other
Washington Partners | United States | Leasing
Aggregate terms of these acquisitions included: (1) cash paid at closing of $93.0 million, (2) guaranteed deferred consideration of $29.4 million subject only to the passage of time, and (3) contingent earn-out consideration of $47.2 million, which we will pay upon satisfaction of certain performance conditions and which we have recorded at their respective acquisition date fair value. A preliminary allocation of this purchase consideration resulted in goodwill of $143.8 million, identifiable intangibles of $20.3 million, and other net assets (acquired assets less assumed liabilities) of $5.5 million. As of June 30, 2016, we have not completed our analysis to assign fair values to all the identifiable intangible and tangible assets acquired and, therefore, we may further refine the purchase price allocations for our 2016 acquisitions during their open measurement periods. During the six months ended June 30, 2016, we paid $30.6 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years. We also paid $2.8 million to acquire a portion of the redeemable noncontrolling interest related to our 2014 acquisition of Tenzing AB, a Swedish real estate services provider. On June 6, 2016, we announced we had reached a definitive agreement to acquire Integral UK Ltd., a leading provider of mechanical and electrical property maintenance in the United Kingdom ("UK"). The acquisition will make JLL one of the largest mobile engineering services providers for property worldwide and will strengthen our ability to self-perform property maintenance for clients across EMEA, adding to the already strong base of transactional services. Refer to additional discussion on the closing of the acquisition in Note 14, Subsequent Events. 2015 Business Combination Activity During the six months ended June 30, 2016, we made adjustments to our preliminary allocation of the purchase consideration for certain acquisitions completed in 2015. These adjustments resulted in an $8.7 million increase to goodwill and related decreases of $4.5 million and $4.2 million to identifiable intangibles and other net assets acquired (assets less acquired liabilities), respectively. As of June 30, 2016, we have not completed our analysis to assign fair values to all the identifiable intangible and tangible assets acquired and, therefore, we may further refine the purchase price allocations for our 2015 acquisitions with open measurement periods. Earn-Out Payments As of June 30, 2016, we had the potential to make a maximum of $301.4 million (undiscounted) in earn-out payments on 43 completed acquisitions, subject to the achievement of certain performance criteria. We accrued $169.6 million, representing the fair value of these obligations as of June 30, 2016, which we include in Other current and Other long-term liabilities within our Condensed Consolidated Balance Sheet. Assuming the achievement of the applicable performance criteria, we anticipate making these earn-out payments over the next seven years. As of December 31, 2015, we had the potential to make a maximum of $230.4 million (undiscounted) in earn-out payments on 28 completed acquisitions, subject to the achievement of certain performance criteria. We accrued $127.3 million, representing the fair value of these obligations as of December 31, 2015, which is included in Other current and Other long-term liabilities within our Condensed Consolidated Balance Sheet. Goodwill and Other Intangible Assets Significant portions of our goodwill and unamortized intangibles are denominated in currencies other than the U.S. dollar, which means a portion of the movements in the reported book value of these balances is attributable to movements in foreign currency exchange rates. The tables below detail the foreign exchange impact on our goodwill and intangible balances. Goodwill and unamortized intangibles of $2,496.4 million as of June 30, 2016 consisted of: (1) goodwill of $2,262.7 million with indefinite useful lives that are not amortized, (2) identifiable intangibles of $220.8 million amortized over their remaining finite useful lives, and (3) $12.9 million of identifiable intangibles with indefinite useful lives that are not amortized. The following tables detail, by reporting segment, movements in goodwill with indefinite useful lives.
| Real Estate Services |  |
(in millions) | Americas | EMEA | Asia Pacific | LaSalle | Consolidated
Balance as of December 31, 2015 | $ | 1,161.1 |  | 696.2 |  | 266.6 |  | 17.6 |  | 2,141.5 |
Additions, net of adjustments | 102.7 |  | 36.6 |  | 13.2 |  | — |  | 152.5 |
Impact of exchange rate movements | 0.9 |  | (34.7 | ) | 3.6 |  | (1.1 | ) | (31.3 | )
Balance as of June 30, 2016 | $ | 1,264.7 |  | 698.1 |  | 283.4 |  | 16.5 |  | 2,262.7 |
| Real Estate Services |  |
(in millions) | Americas | EMEA | Asia Pacific | LaSalle | Consolidated
Balance as of December 31, 2014 | $ | 1,008.3 |  | 650.4 |  | 230.8 |  | 18.4 |  | 1,907.9 |
Additions, net of adjustments | 10.0 |  | 15.3 |  | 18.7 |  | — |  | 44.0 |
Impact of exchange rate movements | (0.6 | ) | (14.1 | ) | (4.0 | ) | 0.1 |  | (18.6 | )
Balance as of June 30, 2015 | $ | 1,017.7 |  | 651.6 |  | 245.5 |  | 18.5 |  | 1,933.3 |
The following tables detail, by reporting segment, movements in the gross carrying amount and accumulated amortization of our identifiable intangibles.
| Real Estate Services |  |
(in millions) | Americas | EMEA | Asia Pacific | LaSalle | Consolidated
Gross Book Value |  |  |  |  |
Balance as of December 31, 2015 | $ | 297.1 |  | 48.5 |  | 14.3 |  | 6.3 |  | 366.2 |
Additions, net of adjustments | 19.3 |  | 6.6 |  | 1.2 |  | — |  | 27.1 |
Impact of exchange rate movements | (0.2 | ) | (3.3 | ) | 0.3 |  | 0.2 |  | (3.0 | )
Balance as of June 30, 2016 | $ | 316.2 |  | 51.8 |  | 15.8 |  | 6.5 |  | 390.3 |
Accumulated Amortization |  |  |  |  |  |  |  |  |  |
Balance as of December 31, 2015 | $ | (97.0 | ) | (32.6 | ) | (9.3 | ) | (0.1 | ) | (139.0 | )
Amortization, net | (15.6 | ) | (4.0 | ) | (0.7 | ) | — |  | (20.3 | )
Impact of exchange rate movements | 0.3 |  | 2.6 |  | (0.2 | ) | — |  | 2.7 |
Balance as of June 30, 2016 | $ | (112.3 | ) | (34.0 | ) | (10.2 | ) | (0.1 | ) | (156.6 | )
Net book value as of June 30, 2016 | $ | 203.9 |  | 17.8 |  | 5.6 |  | 6.4 |  | 233.7 |
| Real Estate Services |  |
(in millions) | Americas | EMEA | Asia Pacific | LaSalle | Consolidated
Gross Book Value |  |  |  |  |
Balance as of December 31, 2014 | $ | 103.4 |  | 43.8 |  | 9.5 |  | 7.0 |  | 163.7 |
Additions, net of adjustments | 2.3 |  | 0.7 |  | 1.9 |  | — |  | 4.9 |
Impact of exchange rate movements | — |  | (0.4 | ) | (0.2 | ) | (0.2 | ) | (0.8 | )
Balance as of June 30, 2015 | $ | 105.7 |  | 44.1 |  | 11.2 |  | 6.8 |  | 167.8 |
Accumulated Amortization |  |  |  |  |  |  |  |  |  |
Balance as of December 31, 2014 | $ | (84.9 | ) | (31.0 | ) | (8.9 | ) | (0.1 | ) | (124.9 | )
Amortization, net | (3.4 | ) | (1.3 | ) | (0.2 | ) | — |  | (4.9 | )
Impact of exchange rate movements | — |  | 0.3 |  | 0.1 |  | — |  | 0.4 |
Balance as of June 30, 2015 | $ | (88.3 | ) | (32.0 | ) | (9.0 | ) | (0.1 | ) | (129.4 | )
Net book value as of June 30, 2015 | $ | 17.4 |  | 12.1 |  | 2.2 |  | 6.7 |  | 38.4 |
We amortize our identifiable intangible assets with finite lives on a straight-line basis over their useful lives. The remaining estimated future amortization expense by year as of June 30, 2016 is presented in the following table.
(in millions) |
2016 (6 months) | $ | 23.2 |
2017 | 41.4 |
2018 | 37.4 |
2019 | 31.2 |
2020 | 25.6 |
2021 | 16.9 |
Thereafter | 45.1 |
Total | $ | 220.8 |

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