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Business Combinations, Goodwill and Other Intangible Assets
 9 Months Ended
Sep. 30, 2018
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]  
Business Combinations, Goodwill and Other Intangible Assets
5.
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
2018 Business Combinations Activity
Aggregate terms of our acquisitions included: (1) cash paid at closing of $31.7 million, (2) guaranteed deferred consideration of $1.9 million, and (3) contingent earn-out consideration of $2.7 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 $30.1 million, identifiable intangibles of $5.7 million, and other net assets (acquired assets less assumed liabilities) of $0.5 million. As of September 30, 2018, 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 2018 acquisitions during their open measurement periods.
During the nine months ended September 30, 2018, we paid $63.3 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years. We also paid $1.5 million to acquire the final portion of the redeemable noncontrolling interest related to our 2014 acquisition of Tenzing AB, a Swedish real estate services provider.
Within the 2018 acquisition activity, we completed four new strategic acquisitions, expanding our capabilities and increasing our presence in key regional markets. These strategic acquisitions are presented below.
Acquired Company
Quarter of Acquisition
Country
Primary Service Line
Stessa Inc.
Q1
United States
Advisory, Consulting and Other
Raymond Chabot Grant Thornton & Co. LLP
Q1
Canada
Advisory, Consulting and Other
JCL International Inc.
Q1
Philippines
Project & Development Services
Northwest Atlantic
Q3
Canada
Leasing

2017 Business Combination Activity
During the nine months ended September 30, 2018, we made no adjustments to our preliminary allocation of the purchase consideration for certain acquisitions completed in 2017. As of September 30, 2018, we have completed our analysis to assign fair values to all the identifiable intangible and tangible assets acquired for our 2017 acquisitions.
Earn-Out Payments
($ in millions)
September 30, 2018
 
December 31, 2017
Number of acquisitions with earn-out payments subject to the achievement of certain performance criteria
55

 
56

Maximum earn-out payments (undiscounted)
$
382.9

 
436.2

Short-term earn-out liabilities (fair value)1
32.6

 
49.6

Long-term earn-out liabilities (fair value)1
130.7

 
177.5

1 Included in Short-term and Long-term acquisition obligations on the Condensed Consolidated Balance Sheets
Assuming the achievement of the applicable performance criteria, we anticipate making these earn-out payments over the next six years. Refer to Note 8, Fair Value Measurements, and Note 11, Restructuring and Acquisition Charges, for additional discussion of our earn-out liabilities.
Goodwill and Other Intangible Assets
Goodwill and unamortized intangibles as of September 30, 2018 consisted of: (1) goodwill of $2,689.7 million, (2) identifiable intangibles of $282.7 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, 2017
$
1,412.2

957.6

323.0

16.5

 
$
2,709.3

Additions, net of adjustments
21.0

—

9.1

—

 
30.1

Impact of exchange rate movements
(0.5
)
(39.5
)
(9.2
)
(0.5
)
 
(49.7
)
Balance as of September 30, 2018
$
1,432.7

918.1

322.9

16.0

 
$
2,689.7

 
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


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, 2017
$
241.8

 
117.0

88.8

23.3

—

 
$
470.9

Additions, net of adjustments (1)
36.8

 
3.6

—

2.1

—

 
42.5

Adjustment for fully amortized intangibles
(17.2
)
 
(36.2
)
(1.7
)
(0.7
)
—

 
(55.8
)
Impact of exchange rate movements
—

 
0.3

(3.3
)
(2.0
)
—

 
(5.0
)
Balance as of September 30, 2018
$
261.4

 
84.7

83.8

22.7

—

 
$
452.6

 
 
 
 
 
 
 
 
 
Accumulated Amortization
 
 
 

 

 

 

 
 

Balance as of December 31, 2017
$
(55.1
)
 
(61.3
)
(43.1
)
(6.4
)
—

 
$
(165.9
)
Amortization, net (2)
(32.2
)
 
(10.2
)
(9.5
)
(1.9
)
—

 
(53.8
)
Adjustment for fully amortized intangibles
17.2

 
36.2

1.7

0.7

—

 
55.8

Impact of exchange rate movements
—

 
—

1.8

1.0

—

 
2.8

Balance as of September 30, 2018
$
(70.1
)
 
(35.3
)
(49.1
)
(6.6
)
—

 
$
(161.1
)
 


 
 
 
 
 
 
 
Net book value as of September 30, 2018
$
191.3

 
49.4

34.7

16.1

—

 
$
291.5

(1) Included in this amount for MSRs was $8.7 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 before reimbursements 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, 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 before reimbursements 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, 2018, is presented in the following table.
(in millions)
MSRs
Other Intangibles
 
Total
2018 (3 months)
$
6.7

9.7

 
$
16.4

2019
30.3

23.7

 
54.0

2020
28.4

19.2

 
47.6

2021
25.4

12.4

 
37.8

2022
22.5

6.5

 
29.0

2023
19.1

4.3

 
23.4

Thereafter
58.9

15.6

 
74.5

Total
$
191.3

91.4

 
$
282.7