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Business Combinations, Goodwill and Other Intangible Assets | 12 Months Ended
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Dec. 31, 2017
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract] |
Business Combinations, Goodwill and Other Intangible Assets |
4. | BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
2017 Business Combinations Activity During the year ended December 31, 2017, we completed five new acquisitions, as presented in the below table. These acquisitions continued to expand our capabilities and increase our presence in key regional markets.
Acquired Company | Quarter of Acquisition | Primary Country | Primary Service Line
Maloney Field Services | Q1 | Australia | Advisory, Consulting and Other
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: (i) cash paid at closing of $22.4 million (which excludes $5.6 million in cash acquired), (ii) guaranteed deferred consideration of $1.8 million subject only to the passage of time, and (iii) contingent earn-out consideration of $11.5 million recorded at their respective acquisition date fair value, which we will pay upon satisfaction of certain performance conditions. A preliminary allocation of this purchase consideration resulted in goodwill of $24.1 million, identifiable intangibles of $9.7 million, and other net assets (acquired assets less assumed liabilities) of $1.9 million. As of December 31, 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 2017 acquisitions during respective open measurement periods. During the year ended December 31, 2017, we also paid $50.7 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. Of the $29.7 million of total additions to goodwill in 2017, we expected to amortize and deduct $3.5 million for tax purposes as of December 31, 2017, subject to statutory amortization periods. 2016 Business Combinations Activity During the year ended December 31, 2016, we completed 28 new acquisitions: 16 located in the Americas, eight located in EMEA, and four located in Asia Pacific. Aggregate terms of these acquisitions included: (i) cash paid at closing of $483.9 million, (ii) guaranteed deferred consideration of $62.7 million subject only to the passage of time, and (iii) contingent earn-out consideration of $103.3 million recorded at their respective acquisition date fair value, which we will pay upon satisfaction of certain performance conditions. As of December 31, 2016, a preliminary allocation of this purchase consideration resulted in goodwill of $529.8 million, identifiable intangibles of $104.5 million, and other net assets (acquired assets less assumed liabilities) of $15.6 million. As of December 31, 2016, we had not completed our analysis to assign fair values to all the identifiable intangible and tangible assets acquired and, therefore, the purchase price allocations for these acquisitions was not final. During the year ended December 31, 2017, we made adjustments to our preliminary allocation of the purchase consideration for certain acquisitions completed in 2016 during their respective open measurement periods. These adjustments resulted in a $5.6 million increase to goodwill, which included a $1.9 million net working capital adjustment payment, and a $0.4 million reduction to identifiable intangibles. As of December 31, 2017, we have completed our analysis to assign fair values to all the identifiable intangible and tangible assets acquired; therefore, purchase price allocations for our 2016 acquisitions are final. During the year ended December 31, 2016, we also paid $53.9 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years. In addition, we paid $2.8 million to acquire a portion of the redeemable noncontrolling interest related to our 2014 acquisition of Tenzing AB. Of the $539.8 million of total additions to goodwill in 2016, we expected to amortize and deduct $176.4 million for tax purposes as of December 31, 2016, subject to statutory amortization periods. Earn-Out Payments As of December 31, 2017, we had the potential to make a maximum of $436.2 million (undiscounted) in earn-out payments on 56 completed acquisitions, subject to the achievement of certain performance criteria. We have accrued $227.1 million, representing the fair value of these obligations as of December 31, 2017, which is included in Short-term earn-out liabilities and Long-term earn-out liabilities within the Consolidated Balance Sheet. Assuming the achievement of the applicable performance criteria, we anticipate these earn-out payments will be made over the next six years. Adjustments to earn-out liabilities in periods subsequent to the completion of acquisitions are reflected in Restructuring and acquisition charges within Consolidated Statements of Comprehensive Income. Refer to Note 9, Fair Value Measurements, and Note 14, Restructuring and Acquisition Charges, for additional discussion of our earn-out liabilities. 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. Goodwill and Other Intangible Assets Goodwill and unamortized intangibles of $3,014.3 million as of December 31, 2017 consisted of: (i) goodwill of $2,709.3 million, (ii) identifiable intangibles of $296.2 million amortized over their remaining finite useful lives, and (iii) $8.8 million of identifiable intangibles with indefinite useful lives that are not amortized. Significant portions of our goodwill and unamortized intangibles are denominated in currencies other than the U.S. dollar, which means a portion of the movements in the reported book value of these balances is attributable to movements in foreign currency exchange rates. The following table details, by reporting segment, the annual movements in goodwill.
($ 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 | 244.3 |  | 253.8 |  | 41.7 |  | — |  | 539.8 |
Impact of exchange rate movements | 0.7 |  | (98.3 | ) | (2.2 | ) | (2.2 | ) | (102.0 | )
Balance as of December 31, 2016 | 1,406.1 |  | 851.7 |  | 306.1 |  | 15.4 |  | 2,579.3 |
Additions, net of adjustments | 5.3 |  | 17.7 |  | 6.7 |  | — |  | 29.7 |
Impact of exchange rate movements | 0.8 |  | 88.2 |  | 10.2 |  | 1.1 |  | 100.3 |
Balance as of December 31, 2017 | $ | 1,412.2 |  | 957.6 |  | 323.0 |  | 16.5 |  | $ | 2,709.3 |
The following table details, by reporting segment, the annual movements in the gross carrying amount and accumulated amortization of our identifiable intangibles.
| MSR |  | 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 | 21.5 |  |  | 41.8 |  | 52.5 |  | 10.2 |  | — |  |  | 126.0 |
Impairments (1) | — |  |  | — |  | — |  | — |  | (6.5 | ) |  | (6.5 | )
Impact of exchange rate movements | — |  |  | (0.2 | ) | (9.9 | ) | (0.3 | ) | 0.3 |  |  | (10.1 | )
Balance as of December 31, 2016 | 193.1 |  |  | 167.1 |  | 91.1 |  | 24.2 |  | 0.1 |  |  | 475.6 |
Additions, net of adjustments (2) | 66.6 |  |  | 0.4 |  | 3.1 |  | 5.8 |  | — |  |  | 75.9 |
Adjustment for fully amortized intangibles | (17.9 | ) |  | (50.7 | ) | (13.6 | ) | (7.9 | ) | (0.1 | ) |  | (90.2 | )
Impact of exchange rate movements | — |  |  | 0.2 |  | 8.2 |  | 1.2 |  | — |  |  | 9.6 |
Balance as of December 31, 2017 | $ | 241.8 |  |  | 117.0 |  | 88.8 |  | 23.3 |  | — |  |  | 470.9 |
Accumulated Amortization |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of December 31, 2015 | $ | (8.6 | ) |  | (88.4 | ) | (32.6 | ) | (9.3 | ) | (0.1 | ) |  | (139.0 | )
Amortization expense (3) | (23.7 | ) |  | (10.8 | ) | (11.0 | ) | (2.3 | ) | — |  |  | (47.8 | )
Impact of exchange rate movements | — |  |  | 0.5 |  | 5.6 |  | 0.1 |  | — |  |  | 6.2 |
Balance as of December 31, 2016 | (32.3 | ) |  | (98.7 | ) | (38.0 | ) | (11.5 | ) | (0.1 | ) |  | (180.6 | )
Amortization expense, net (3) | (40.7 | ) |  | (13.7 | ) | (14.8 | ) | (2.6 | ) | — |  |  | (71.8 | )
Adjustment for fully amortized intangibles | 17.9 |  |  | 50.7 |  | 13.6 |  | 7.9 |  | 0.1 |  |  | 90.2 |
Impact of exchange rate movements | — |  |  | 0.4 |  | (3.9 | ) | (0.2 | ) | — |  |  | (3.7 | )
Balance as of December 31, 2017 | $ | (55.1 | ) |  | (61.3 | ) | (43.1 | ) | (6.4 | ) | — |  |  | (165.9 | )
Net book value as of December 31, 2017 | $ | 186.7 |  |  | 55.7 |  | 45.7 |  | 16.9 |  | — |  |  | 305.0 |
(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) Included in this amount for MSRs was $10.8 million relating to write-offs due to prepayments of sold warehouse receivables for which we retained the servicing rights. (3) Amortization of MSRs is included in Revenue within the Consolidated Statements of Comprehensive Income. The remaining weighted average amortization period of MSRs and other finite-lived identifiable intangible assets is 4.54 years and 3.87 years, respectively, and the remaining estimated future amortization expense by year, as of December 31, 2017, is presented in the following table.
($ in millions) | MSRs | Other Intangibles | Total
2018 | $ | 31.0 |  | $ | 27.9 |  | $ | 58.9 |
2019 | 28.2 |  | 23.7 |  | 51.9 |
2020 | 25.7 |  | 19.2 |  | 44.9 |
2021 | 21.9 |  | 12.4 |  | 34.3 |
2022 | 18.9 |  | 6.5 |  | 25.4 |
Thereafter | 61.0 |  | 19.8 |  | 80.8 |
Total | $ | 186.7 |  | $ | 109.5 |  | $ | 296.2 |

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