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Business Combinations, Goodwill and Other Intangible Assets | 9 Months Ended
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Sep. 30, 2020
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract] |
Business Combinations, Goodwill and Other Intangible Assets | 5. BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS 2020 Business Combinations Activity During the nine months ended September 30, 2020, we completed no new acquisitions and paid $58.5 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years. 2019 Business Combinations Activity During the nine months ended September 30, 2020, we made no adjustments to our preliminary allocation of the purchase consideration for certain acquisitions completed in 2019. As of September 30, 2020, we have completed our analysis to assign fair values to all the identifiable intangible and tangible assets acquired for our 2019 acquisitions. Earn-Out Payments
($ in millions) | September 30, 2020 |  | December 31, 2019
Number of acquisitions with earn-out payments subject to the achievement of certain performance criteria | 42 |  |  | 44 |
Maximum earn-out payments (undiscounted) | $ | 221.3 |  |  | $ | 268.9 |
Short-term earn-out liabilities (fair value)1 | 77.0 |  |  | 53.9 |
Long-term earn-out liabilities (fair value)1 | 18.0 |  |  | 94.5 |
1 Included in Short-term and Long-term acquisition-related 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 five 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, 2020 consisted of: (1) goodwill of $4,164.0 million, (2) identifiable intangibles of $601.9 million amortized over their remaining finite useful lives, and (3) $52.0 million of identifiable intangibles with indefinite useful lives that are not amortized. Notable 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. During the three months ended September 30, 2020, as part of our annual impairment test of goodwill, we have considered qualitative and quantitative factors and determined it is not more-likely-than-not that the fair value of our Americas, Asia Pacific, and LaSalle reporting units are less than their carrying values. With respect to our EMEA reporting unit reporting, we performed step 1 of the goodwill impairment analysis which indicated the estimated fair value exceeded the carrying value by over 20%. In performing step 1, we relied on the discounted cash flow (“DCF”) method, an income approach, in determining the estimated fair value. Our DCF analysis relied on significant judgments and assumptions in determining the inputs, specifically, forecasted revenue growth, forecasted profitability margin, and the discount rate used to present value the estimated future cash flows. 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, 2019 | $ | 2,877.6 |  | 915.9 |  | 317.6 |  | 57.1 |  |  | $ | 4,168.2 |
Dispositions | — |  | (0.7 | ) | — |  | — |  |  | (0.7 | )
Impact of exchange rate movements | (1.1 | ) | (4.7 | ) | 2.6 |  | (0.3 | ) |  | (3.5 | )
Balance as of September 30, 2020 | $ | 2,876.5 |  | 910.5 |  | 320.2 |  | 56.8 |  |  | $ | 4,164.0 |
| Real Estate Services |  |  |
(in millions) | Americas | EMEA | Asia Pacific | LaSalle |  | Consolidated
Balance as of December 31, 2018 | $ | 1,452.0 |  | 906.8 |  | 316.8 |  | 22.2 |  |  | $ | 2,697.8 |
Additions, net of adjustments | 1,392.9 |  | 1.6 |  | — |  | 35.5 |  |  | 1,430.0 |
Dispositions | — |  | (0.9 | ) | — |  | — |  |  | (0.9 | )
Impact of exchange rate movements | 0.3 |  | (37.6 | ) | (4.6 | ) | (1.8 | ) |  | (43.7 | )
Balance as of September 30, 2019 | $ | 2,845.2 |  | 869.9 |  | 312.2 |  | 55.9 |  |  | $ | 4,083.2 |
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, 2019 | $ | 480.4 |  |  | 285.7 |  | 55.9 |  | 21.4 |  | 54.0 |  |  | $ | 897.4 |
Additions, net of adjustments (1) | 77.9 |  |  | — |  | — |  | 0.5 |  | — |  |  | 78.4 |
Adjustment for fully amortized intangibles | (30.9 | ) |  | (14.1 | ) | (0.4 | ) | — |  | — |  |  | (45.4 | )
Impact of exchange rate movements | — |  |  | (0.2 | ) | (1.5 | ) | 0.3 |  | 1.9 |  |  | 0.5 |
Balance as of September 30, 2020 | $ | 527.4 |  |  | 271.4 |  | 54.0 |  | 22.2 |  | 55.9 |  |  | $ | 930.9 |
Accumulated Amortization |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of December 31, 2019 | $ | (104.0 | ) |  | (68.3 | ) | (33.1 | ) | (6.7 | ) | (2.7 | ) |  | $ | (214.8 | )
Amortization, net (2) | (65.5 | ) |  | (35.0 | ) | (5.2 | ) | (1.1 | ) | (2.0 | ) |  | (108.8 | )
Adjustment for fully amortized intangibles | 30.9 |  |  | 14.1 |  | 0.4 |  | — |  | — |  |  | 45.4 |
Impact of exchange rate movements | — |  |  | 0.4 |  | 0.9 |  | (0.1 | ) | — |  |  | 1.2 |
Balance as of September 30, 2020 | $ | (138.6 | ) |  | (88.8 | ) | (37.0 | ) | (7.9 | ) | (4.7 | ) |  | $ | (277.0 | )
Net book value as of September 30, 2020 | $ | 388.8 |  |  | 182.6 |  | 17.0 |  | 14.3 |  | 51.2 |  |  | $ | 653.9 |
(1) Included in this amount for MSRs was (i) $15.3 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or retained the servicing rights and (ii) $1.9 million relating to a net impairment valuation allowance. (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, 2018 | $ | 266.2 |  |  | 90.0 |  | 83.1 |  | 23.5 |  | 43.9 |  |  | $ | 506.7 |
Additions, net of adjustments (1) | 208.3 |  |  | 194.5 |  | — |  | — |  | 10.3 |  |  | 413.1 |
Adjustment for fully amortized intangibles | (21.8 | ) |  | (0.7 | ) | (22.1 | ) | (2.0 | ) | — |  |  | (46.6 | )
Impairments | — |  |  | (0.5 | ) | — |  | — |  | — |  |  | (0.5 | )
Impact of exchange rate movements | — |  |  | — |  | (2.8 | ) | (0.8 | ) | (1.6 | ) |  | (5.2 | )
Balance as of September 30, 2019 | $ | 452.7 |  |  | 283.3 |  | 58.2 |  | 20.7 |  | 52.6 |  |  | $ | 867.5 |
Accumulated Amortization |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of December 31, 2018 | $ | (72.4 | ) |  | (38.8 | ) | (51.8 | ) | (6.8 | ) | — |  |  | $ | (169.8 | )
Amortization, net (2) | (41.6 | ) |  | (18.9 | ) | (7.5 | ) | (1.6 | ) | (2.0 | ) |  | (71.6 | )
Adjustment for fully amortized intangibles | 21.8 |  |  | 0.7 |  | 22.1 |  | 2.0 |  | — |  |  | 46.6 |
Impairments | — |  |  | 0.5 |  | — |  | — |  | — |  |  | 0.5 |
Impact of exchange rate movements | — |  |  | — |  | 2.2 |  | 0.2 |  | — |  |  | 2.4 |
Balance as of September 30, 2019 | $ | (92.2 | ) |  | (56.5 | ) | (35.0 | ) | (6.2 | ) | (2.0 | ) |  | $ | (191.9 | )
Net book value as of September 30, 2019 | $ | 360.5 |  |  | 226.8 |  | 23.2 |  | 14.5 |  | 50.6 |  |  | $ | 675.6 |
(1) Included in this amount for MSRs was $10.6 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or 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, 2020, is presented in the following table.
(in millions) | MSRs | Other Intangibles |  | Total
2020 (remaining 3 months) | $ | 17.2 |  | 16.0 |  |  | $ | 33.2 |
2021 | 66.2 |  | 48.6 |  |  | 114.8 |
2022 | 59.3 |  | 42.9 |  |  | 102.2 |
2023 | 53.0 |  | 40.5 |  |  | 93.5 |
2024 | 45.4 |  | 36.2 |  |  | 81.6 |
2025 | 37.7 |  | 18.9 |  |  | 56.6 |
Thereafter | 110.0 |  | 10.0 |  |  | 120.0 |
Total | $ | 388.8 |  | 213.1 |  |  | $ | 601.9 |

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