
4.	BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

2017 Business Combinations Activity

During the nine months ended September 30, 2017, we completed five new strategic acquisitions, as presented in the table below. These acquisitions reflect continued efforts to grow scale in key regional markets across various business lines.



Acquired Company	Quarter of Acquisition	Country	Primary Service Line
Maloney Field Services	Q1	Australia	Capital Markets & Hotels
Meridian Immobilier SA	Q1	Switzerland	Leasing
Urbis Partners, LLC	Q1	United States	Leasing
Zabel Property AG	Q1	Germany	Capital Markets & Hotels
Integra Realty Resources - Orange County	Q3	United States	Advisory, Consulting and Other

Aggregate terms of these acquisitions included: (1) cash paid at closing of $22.4 million (exclusive of $5.6 million in cash acquired), (2) guaranteed deferred consideration of $1.8 million subject only to the passage of time, and (3) contingent earn-out consideration of $11.5 million, which we will pay upon satisfaction of certain performance conditions and which we have initially recorded at their respective acquisition date fair value.

A preliminary allocation of purchase consideration resulted in goodwill of $24.3 million, identifiable intangibles of $9.7 million, and other net assets (acquired assets less assumed liabilities) of $1.7 million. As of September 30, 2017, we have not completed our analysis to assign fair values to all of the identifiable intangible and tangible assets acquired and, therefore, we may further refine the purchase price allocations for our 2017 acquisitions during their open measurement periods.

During the nine months ended September 30, 2017, we paid $41.2 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years. We also paid $2.4 million to acquire a portion of the redeemable noncontrolling interest related to our 2014 acquisition of Tenzing AB, a Swedish real estate services provider.

2016 Business Combination Activity

During the nine months ended September 30, 2017, we made adjustments to our preliminary allocation of the purchase consideration for certain acquisitions completed in 2016. These adjustments resulted in a $5.3 million increase to goodwill, which included a $1.9 million net working capital adjustment payment for a 2016 acquisition, and a $0.4 million reduction to identifiable intangibles. As of September 30, 2017, 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 with open measurement periods.

Earn-Out Payments

As of September 30, 2017, we had the potential to make a maximum of $436.9 million (undiscounted) in earn-out payments on 56 completed acquisitions, subject to the achievement of certain performance criteria. We accrued $223.5 million, representing the fair value of these obligations, as of September 30, 2017, which is included in Short-term earn-out liabilities and Long-term earn-out 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 six years.

As of December 31, 2016, we had the potential to make a maximum of $435.0 million (undiscounted) in earn-out payments on 52 completed acquisitions, subject to the achievement of certain performance criteria. We accrued $229.6 million, representing the fair value of these obligations as of December 31, 2016. Refer to Note 7, Fair Value Measurements, and Note 10, Restructuring and Acquisition Charges, for additional discussion of our earn-out liabilities.

Goodwill and Other Intangible Assets

Goodwill and unamortized intangibles of $3,008.7 million as of September 30, 2017 consisted of: (1) goodwill of $2,701.3 million, (2) identifiable intangibles of $298.6 million amortized over their remaining finite useful lives, and (3) $8.8 million of identifiable intangibles with indefinite useful lives that are not amortized. 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 following tables detail, by reporting segment, movements in goodwill.



	Real Estate Services
(in millions)	Americas		EMEA	Asia Pacific	LaSalle	Consolidated
Balance as of December 31, 2016	$	1,406.1	851.7	306.1	15.4	$	2,579.3
Additions, net of adjustments	5.2		17.9	6.5	—	29.6
Impact of exchange rate movements	0.9		80.5	10.0	1.0	92.4
Balance as of September 30, 2017	$	1,412.2	950.1	322.6	16.4	$	2,701.3



	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	174.2		239.8		36.6	—		450.6
Impact of exchange rate movements	0.8		(50.8	)	6.2	(1.5	)	(45.3		)
Balance as of September 30, 2016	$	1,336.1	885.2		309.4	16.1		$	2,546.8

The following tables detail, by reporting segment, movements in the gross carrying amount and accumulated amortization of our identifiable intangibles.



	MSRs			Other Intangibles
(in millions)	Americas			Americas		EMEA		Asia Pacific		LaSalle		Consolidated
Gross Carrying Amount
Balance as of December 31, 2016	$	193.1		167.1		91.1		24.2		0.1		$	475.6
Additions, net of adjustments ⁽¹⁾	50.7			0.4		3.1		5.8		—		60.0
Adjustment for fully amortized intangibles	(12.5		)	(50.0	)	(7.7	)	(8.0	)	(0.1	)	(78.3		)
Impact of exchange rate movements	—			0.2		7.6		1.3		—		9.1
Balance as of September 30, 2017	$	231.3		117.7		94.1		23.3		—		$	466.4

Accumulated Amortization
Balance as of December 31, 2016	$	(32.3	)	(98.7	)	(38.0	)	(11.5	)	(0.1	)	$	(180.6	)
Amortization, net ⁽²⁾	(29.8		)	(10.3	)	(11.2	)	(1.9	)	—		(53.2		)
Adjustment for fully amortized intangibles	12.5			50.0		7.7		8.0		0.1		78.3
Impact of exchange rate movements	—			0.3		(3.6	)	(0.2	)	—		(3.5		)
Balance as of September 30, 2017	$	(49.6	)	(58.7	)	(45.1	)	(5.6	)	—		$	(159.0	)

Net book value as of September 30, 2017	$	181.7		59.0		49.0		17.7		—		$	307.4

(1) Included in this amount for MSRs was $7.7 million relating to prepayments/write-offs due to prepayments of sold warehouse receivables for which we retained the servicing rights.

(2) Amortization of MSRs is included in Revenue within the Condensed Consolidated Statements of Comprehensive Income.



	MSRs			Other Intangibles
(in millions)	Americas			Americas		EMEA		Asia Pacific		LaSalle		Consolidated
Gross Carrying Amount
Balance as of December 31, 2015	$	171.6		125.5		48.5		14.3		6.3		$	366.2
Additions, net of adjustments	17.0			38.6		51.8		5.7		—		113.1
Impairments ⁽¹⁾	—			—		—		—		(6.5	)	(6.5		)
Impact of exchange rate movements	—			(0.3	)	(4.7	)	0.5		0.3		(4.2		)
Balance as of September 30, 2016	$	188.6		163.8		95.6		20.5		0.1		$	468.6

Accumulated Amortization
Balance as of December 31, 2015	$	(8.6	)	(88.4	)	(32.6	)	(9.3	)	(0.1	)	$	(139.0	)
Amortization, net⁽²⁾	(17.8		)	(7.7	)	(7.0	)	(1.3	)	—		(33.8		)
Impact of exchange rate movements	—			0.4		3.5		(0.2	)	—		3.7
Balance as of September 30, 2016	$	(26.4	)	(95.7	)	(36.1	)	(10.8	)	(0.1	)	$	(169.1	)

Net book value as of September 30, 2016	$	162.2		68.1		59.5		9.7		—		$	299.5

(1) In the third quarter of 2016, we fully impaired an indefinite-lived intangible asset related to a 2011 acquisition of an Australian property fund management business.

(2) Amortization of MSRs is included in Revenue within the Condensed Consolidated Statements of Comprehensive Income.

The remaining estimated future amortization expense of MSRs and other identifiable intangible assets, by year, as of September 30, 2017, is presented in the following table.



(in millions)	MSRs		Other Intangibles	Total
2017 (3 months)	$	7.7	11.9	$	19.6
2018	30.0		24.2	54.2
2019	26.9		22.2	49.1
2020	24.2		19.5	43.7
2021	20.4		13.3	33.7
2022	17.4		13.5	30.9
Thereafter	55.1		12.3	67.4
Total	$	181.7	116.9	$	298.6