XML 32 R11.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Acquisitions (Notes) | 12 Months Ended
--- | ---
Dec. 31, 2017
Business Combinations [Abstract] |
Acquisitions | Acquisitions We continue to evaluate strategic opportunities to expand our industry expertise, strengthen our position in high-growth and key strategic geographical markets and industry sectors, advance technological capabilities and improve operational efficiency through both acquisitions and increased ownership interests in current investments. Our acquisitions typically provide for an initial payment at the time of closing and additional contingent purchase price payments based on the future performance of the acquired entity. We have entered into agreements that may require us to purchase additional equity interests in certain consolidated and unconsolidated subsidiaries. The amounts at which we record these transactions in our financial statements are based on estimates of the future financial performance of the acquired entity, the timing of the exercise of these rights, changes in foreign currency exchange rates and other factors. During 2017, we completed ten acquisitions, eight of which were included in the Integrated Agency Networks ("IAN") operating segment, and two of which were included in the Constituency Management Group ("CMG") operating segment. These acquisitions included a digital marketing agency based in the U.S., a data science and business intelligence firm based in the U.S. with operations in China, an advertising and consulting company based in Indonesia, a strategic communications agency based in the U.K., an independent creative agency based in the U.K., a retail branding and design firm based in the U.S., a content creation and marketing agency based in the Netherlands, an independent media agency and digital consultancy based in Finland, and an integrated marketing communications agency based in Canada. During 2017, we recorded approximately $62.0 of goodwill and intangible assets related to our acquisitions. During 2016, we completed ten acquisitions, three of which were included in the IAN operating segment, and seven of which were included in the CMG operating segment. The most significant acquisitions included a product and service design consultancy based in the U.S., an integrated healthcare marketing communications agency based in the U.S., a content creation and digital agency with offices in the U.S. and the U.K., a mobile consultancy and application development agency based in the U.K., a full-service public relations and digital agency based in China, a search engine optimization and digital content marketing agency based in the U.K., and a mobile focused digital agency based in the U.K. During 2016, we recorded approximately $149.0 of goodwill and intangible assets related to these acquisitions. During 2015, we completed five acquisitions, four of which were included in the IAN operating segment, and one of which was included in the CMG operating segment. The most significant acquisitions included a full-service digital agency in the U.K., a group of creative marketing agencies based in Russia, and a media planning and buying agency with significant digital capabilities in Canada. During 2015, we recorded approximately $61.0 of goodwill and intangible assets related to these acquisitions. The results of operations of our acquired companies were included in our consolidated results from the closing date of each acquisition. We did not make any payments in stock related to our acquisitions in 2017, 2016 or 2015. Details of cash paid for current and prior years' acquisitions are listed below.
| Years ended December 31,
| 2017 |  | 2016 |  | 2015
Cost of investment: current-year acquisitions | $ | 36.8 |  |  | $ | 65.7 |  |  | $ | 37.8 |
Cost of investment: prior-year acquisitions | 54.6 |  |  | 40.7 |  |  | 53.1 |
Less: net cash acquired | (7.1 | ) |  | (13.6 | ) |  | (9.2 | )
Total cost of investment | 84.3 |  |  | 92.8 |  |  | 81.7 |
Operating payments 1 | 47.1 |  |  | 19.1 |  |  | 18.4 |
Total cash paid for acquisitions 2 | $ | 131.4 |  |  | $ | 111.9 |  |  | $ | 100.1 |
1 | Represents cash payments for amounts that have been recognized in operating expenses since the date of acquisition either relating to adjustments to estimates in excess of the initial value of contingent payments recorded or were contingent upon the future employment of the former owners of the acquired companies. Amounts are reflected in the operating section of the Consolidated Statements of Cash Flows.
2 | Of the total cash paid for acquisitions, $30.6, $52.0 and $28.6 for the years ended December 31, 2017, 2016 and 2015, respectively, are classified under the investing section of the Consolidated Statements of Cash Flows as acquisitions, net of cash acquired. These amounts relate to initial payments for new transactions. Of the total cash paid for acquisitions, $53.7, $40.8 and $53.1 for the years ended December 31, 2017, 2016 and 2015, respectively, are classified under the financing section of the Consolidated Statements of Cash Flows as acquisition-related payments. These amounts relate to deferred payments and increases in our ownership interest for prior acquisitions.
For companies acquired, we estimate the fair values of the assets and liabilities based on 100% of the business for consolidation. The purchase price in excess of the estimated fair value of the tangible net assets acquired is allocated to identifiable intangible assets and then to goodwill. Due to the characteristics of advertising, specialized marketing and communication services companies, our acquisitions typically do not have significant amounts of tangible assets since the principal assets we acquire are client relationships and talent. As a result, a substantial portion of the purchase price is primarily allocated to customer lists, trade names and goodwill. For acquisitions we record deferred payment and redeemable noncontrolling interest amounts on our Consolidated Balance Sheets based on their acquisition-date fair value. Deferred payments are recorded on a discounted basis and adjusted quarterly, if necessary, through operating income or net interest expense, depending on the nature of the arrangement, for both changes in estimate and accretion between the acquisition date and the final payment date. See Note 13 for further information on contingent acquisition obligations. Redeemable noncontrolling interests are adjusted quarterly to their estimated redemption value, but not less than their initial fair value. Any adjustments to the redemption value impact retained earnings, except for foreign currency translation adjustments. The following table presents changes in our redeemable noncontrolling interests.
| Years ended December 31,
| 2017 |  | 2016 |  | 2015
Balance at beginning of period | $ | 252.8 |  |  | $ | 251.9 |  |  | $ | 257.4 |
Change in related noncontrolling interests balance | (2.8 | ) |  | 4.9 |  |  | 0.8 |
Changes in redemption value of redeemable noncontrolling interests: |  |  |  |  |
Additions | 7.7 |  |  | 6.8 |  |  | 16.5 |
Redemptions and other | (18.5 | ) |  | (14.8 | ) |  | (25.1 | )
Redemption value adjustments | 12.9 |  |  | 4.0 |  |  | 2.3 |
Balance at end of period | $ | 252.1 |  |  | $ | 252.8 |  |  | $ | 251.9 |
For all acquisitions, if a portion of the deferred payments and purchases of additional interests after the effective date of purchase are contingent upon employment terms, then that amount is accounted for separately from the business combination and recognized as compensation expense over the required earn-out period. Payments deemed as compensation are excluded from the fair value purchase price allocation to tangible net assets and intangible assets acquired.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration