Business Combinations, Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2020

BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

Business Combinations, Goodwill and Other Intangible Assets

4. BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

2020 Business Combinations Activity

During 2020, we completed no new strategic acquisitions and paid $67.7 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

2019 Business Combinations Activity

During the year ended December 31, 2019, we completed four new strategic acquisitions, all located in the Americas.

Acquisition of HFF, Inc. ("HFF")

On July 1, 2019, we completed the acquisition of HFF, a public commercial real estate financial intermediary providing real estate and capital markets services. The acquisition of HFF, regarded as one of the premier capital markets advisors in the industry, greatly enhanced our existing capital markets services, significantly expanded our client reach and aligned with our strategy to grow the capital markets business line. The following table details the total consideration transferred.


(in millions)	Amount
Cash consideration (1)	$	1,029.5
Share consideration (2)	809.2
JLL RSUs issued to replace unvested HFF RSUs (3)	32.0
Total consideration	$	1,870.7

(1) Exclusive of $262.8 million cash and $5.8 million of restricted cash acquired.

(2) Represents the fair value of JLL common stock issued to then-HFF stockholders.

(3) Represents the allocation of expense to the pre-combination period; included within APIC.

The cash and share consideration transferred were used to purchase all outstanding shares of HFF Class A common stock. We financed the cash portion of the purchase price with cash on hand and borrowings under our existing $2.75 billion unsecured revolving credit facility (the "Facility"). For acquisition related costs refer to Note 12, Restructuring and Acquisition Charges. The successor to HFF in the merger acquisition is operating as a wholly-owned subsidiary of JLL and conducts business as JLL.

As of December 31, 2020 our analysis to assign fair values to all tangible and intangible assets and liabilities acquired and assumed for the acquisition of HFF was final. There were no significant adjustments to the purchase price allocation recorded during the year ended December 31, 2020. The allocation of the purchase consideration resulted in identified intangibles of $349.9 million, tangible assets of $1,227.8 million and liabilities of $1,104.7 million. The excess purchase price over the estimated fair value of net assets acquired of $1,397.7 million has been recorded to goodwill. The goodwill relating to this acquisition is primarily attributable to assembled workforce and synergies.

Other 2019 Business Combinations Activity

Aggregate terms of these acquisitions, other than HFF, included (i) cash paid at closing of $40.4 million (net of $3.8 million in cash acquired), (ii) guaranteed deferred consideration of $17.0 million and (iii) contingent earn-out consideration of $5.0 million recorded at their respective acquisition date fair value, which we will pay upon satisfaction of certain performance conditions.

As of December 31, 2019, a preliminary allocation of this purchase consideration for these other acquisitions resulted in goodwill of $62.8 million, identifiable intangibles of $12.7 million, and other net liabilities (assumed liabilities less acquired assets) of $4.7 million, and redeemable noncontrolling interest of $8.4 million. As of December 31, 2020, the purchase price allocations for our 2019 acquisitions was final. There were no significant adjustments to the purchase price allocation recorded during the year ended December 31, 2020.

During the year ended December 31, 2019, we also paid $104.7 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

Of the $1,460.5 million of total additions to goodwill in 2019, we expected to amortize and deduct $25.4 million for tax purposes as of December 31, 2019, subject to statutory amortization periods.

Earn-Out Payments


($ in millions)	December 31, 2020		December 31, 2019
Number of acquisitions with earn-out payments subject to the achievement of certain performance criteria	35		44
Maximum earn-out payments (undiscounted)	$	199.2	268.9
Short-term earn-out liabilities (fair value)(1)	77.2		53.9
Long-term earn-out liabilities (fair value)(1)	8.5		94.5

(1) Included in Short-term and Long-term acquisition obligations on the 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 9, Fair Value Measurements, and Note 14, Restructuring and Acquisition Charges, for additional discussion of our earn-out liabilities.

Goodwill and Other Intangible Assets

Goodwill and unamortized intangibles as of December 31, 2020 consisted of (i) goodwill of $4,224.7 million, (ii) identifiable intangibles of $625.8 million amortized over their remaining finite useful lives and (iii) $54.0 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, 2018	$	1,452.0	906.8	316.8	22.2		$	2,697.8
Additions, net of adjustments	1,424.4		1.6	—	35.5		1,461.5
Dispositions	—		(4.4)	—	—		(4.4)
Impact of exchange rate movements	1.2		11.9	0.8	(0.6)		13.3
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	0.4		44.5	11.6	0.7		57.2
Balance as of December 31, 2020	$	2,878.0	959.7	329.2	57.8		$	4,224.7

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, 2018	$	266.2	90.0	83.1	23.5	43.9	$	506.7
Additions, net of adjustments (1)	247.6		196.7	0.1	—	9.6	454.0
Adjustment for fully amortized intangibles	(33.4)		(0.6)	(28.1)	(2.0)	—	(64.1)
Impairments	—		(0.5)	—	—	—	(0.5)
Impact of exchange rate movements	—		0.1	0.8	(0.1)	0.5	1.3
Balance as of December 31, 2019	480.4		285.7	55.9	21.4	54.0	897.4
Additions, net of adjustments (1)	139.0		—	—	0.5	—	139.5
Adjustment for fully amortized intangibles	(47.3)		(19.9)	(1.9)	(0.1)	—	(69.2)

Impact of exchange rate movements	—		—	1.7	1.8	3.9	7.4
Balance as of December 31, 2020	$	572.1	265.8	55.7	23.6	57.9	$	975.1

Accumulated Amortization
Balance as of December 31, 2018	$	(72.4)	(38.8)	(51.8)	(6.8)	—	$	(169.8)
Amortization expense, net (2)	(65.0)		(30.7)	(9.5)	(1.9)	(2.7)	(109.8)
Adjustment for fully amortized intangibles	33.4		0.6	28.1	2.0	—	64.1
Impairments	—		0.5	—	—	—	0.5
Impact of exchange rate movements	—		0.1	0.1	—	—	0.2
Balance as of December 31, 2019	(104.0)		(68.3)	(33.1)	(6.7)	(2.7)	(214.8)
Amortization expense, net (2)	(91.1)		(46.0)	(7.1)	(1.4)	(2.6)	(148.2)
Adjustment for fully amortized intangibles	47.3		19.9	1.9	0.1	—	69.2

Impact of exchange rate movements	—		0.3	(1.2)	(0.6)	—	(1.5)
Balance as of December 31, 2020	$	(147.8)	(94.1)	(39.5)	(8.6)	(5.3)	$	(295.3)

Net book value as of December 31, 2020	$	424.3	171.7	16.2	15.0	52.6	$	679.8

(1) Included in this amount for MSRs was (i) $23.7 million and $16.6 million for 2020 and 2019, respectively, relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired, or retained the servicing rights and (ii) $0.1 million relating to a net impairment valuation allowance.

(2) 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 4.4 years and 3.2 years, respectively, and the remaining estimated future amortization expense by year, as of December 31, 2020, is presented in the following table.


(in millions)	MSRs		Other Intangibles	Total
2021	$	71.7	48.9	$	120.6
2022	65.6		43.1	108.7
2023	59.8		40.6	100.4
2024	52.1		36.3	88.4
2025	44.1		19.1	63.2
Thereafter	131.0		13.5	144.5
Total	$	424.3	201.5	$	625.8