Business Combinations, Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2022

BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

Business Combinations, Goodwill and Other Intangible Assets

BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

2022 Business Combinations Activity

During the six months ended June 30, 2022, there were no strategic acquisitions. We paid $13.9 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

2021 Business Combinations Activity

During the six months ended June 30, 2021 we completed no strategic acquisitions.

Earn-Out Payments


($ in millions)	June 30, 2022		December 31, 2021
Number of acquisitions with earn-out payments subject to the achievement of certain performance criteria	18		19
Maximum earn-out payments (undiscounted)	$	134.6	149.9
Short-term earn-out liabilities (fair value)(1)	30.2		39.0
Long-term earn-out liabilities (fair value)(1)	44.7		45.1

(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 7, Fair Value Measurements, and Note 10, Restructuring and Acquisition Charges, for additional discussion of our earn-out liabilities.

Goodwill and Other Intangible Assets

In conjunction with our new organizational structure described more fully in Note 3, Business Segments, we reassessed our reporting units as of January 1, 2022, and reassigned goodwill to reflect our new segment structure using a relative fair value allocation approach. Under this methodology, the fair value of each impacted reporting unit was determined using a combination of the income approach and the market approach, and this resulting relative fair value was used to reassign the balance of goodwill.

We considered the change to our reportable segments a triggering event requiring the testing of our goodwill for impairment as of January 1, 2022. We performed a quantitative test relying on the discounted cash flow (“DCF”) method, an income approach, in determining the estimated fair value of our reporting units. Our DCF analysis relied on significant judgements 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. Our analysis indicated that no impairment existed as the estimated fair value of each of our reporting units exceeded its respective carrying value.

Goodwill and unamortized intangibles as of June 30, 2022 consisted of: (1) goodwill of $4,519.9 million, (2) identifiable intangibles of $824.6 million amortized over their remaining finite useful lives, and (3) $47.3 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.

The following table details, by reporting segment, movements in goodwill.



(in millions)	Markets Advisory		Capital Markets	Work Dynamics	JLL Technologies	LaSalle	Consolidated
Balance as of January 1, 2022	$	1,782.9	1,983.9	539.9	247.5	57.4	$	4,611.6
Additions, net of adjustments	—		0.8	4.6	0.4	—	5.8

Impact of exchange rate movements	(40.2)		(43.5)	(11.8)	(0.2)	(1.8)	(97.5)
Balance as of June 30, 2022	$	1,742.7	1,941.2	532.7	247.7	55.6	$	4,519.9

(in millions)

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



(in millions)	MSRs		Other Intangibles	Consolidated
Gross Carrying Amount
Balance as of December 31, 2021	$	669.7	557.4	$	1,227.1
Additions, net of adjustments(1)	78.1		4.9	83.0
Adjustment for fully amortized intangibles	(33.8)		(2.5)	(36.3)

Impact of exchange rate movements	—		(7.7)	(7.7)
Balance as of June 30, 2022	$	714.0	552.1	$	1,266.1

Accumulated Amortization
Balance as of December 31, 2021	$	(191.0)	(149.1)	$	(340.1)
Amortization, net(2)	(58.8)		(33.7)	(92.5)
Adjustment for fully amortized intangibles	33.8		2.5	36.3

Impact of exchange rate movements	—		2.1	2.1
Balance as of June 30, 2022	$	(216.0)	(178.2)	$	(394.2)

Net book value as of June 30, 2022	$	498.0	373.9	$	871.9

(1) Included in this amount for MSRs was $16.7 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 within the Condensed Consolidated Statements of Comprehensive Income.



(in millions)	MSRs		Other Intangibles	Total
Gross Carrying Amount
Balance as of December 31, 2020	$	572.1	403.0	$	975.1
Additions, net of adjustments(1)	61.9		3.8	65.7
Adjustment for fully amortized intangibles	(17.2)		(28.8)	(46.0)

Impact of exchange rate movements	—		(1.6)	(1.6)
Balance as of June 30, 2021	$	616.8	376.4	$	993.2

Accumulated Amortization
Balance as of December 31, 2020	$	(147.8)	(147.5)	$	(295.3)
Amortization, net(2)	(44.9)		(26.3)	(71.2)
Adjustment for fully amortized intangibles	17.2		28.8	46.0

Impact of exchange rate movements	—		(0.2)	(0.2)
Balance as of June 30, 2021	$	(175.5)	(145.2)	$	(320.7)

Net book value as of June 30, 2021	$	441.3	231.2	$	672.5

(1) Included in this amount for MSRs was $7.6 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 within the Condensed Consolidated Statements of Comprehensive Income.