XML 88 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
Business Combinations
 6 Months Ended
Jun. 30, 2012
Business Combinations  
Business Combinations

15.   Business Combinations

        Consistent with the Company's strategic objective to make investments in leading boutique investment and wealth management firms, the Company completed majority investments in Veritable, LP ("Veritable") and Yacktman Asset Management Co. ("Yacktman") on June 29, 2012.

        Veritable, a leading wealth management firm, manages approximately $11.0 billion for ultra-high-net-worth families. The Company's purchase price allocation is provisional and was performed using a financial model that includes assumptions of expected market performance, net client cash flows and discount rates. These provisional amounts may be revised upon completion of the final valuation. The excess of the enterprise value over the net assets acquired was recorded as goodwill, of which 100% was attributed to the Company's High Net Worth segment. The consideration paid (less net tangible assets acquired) will be deductible for U.S. tax purposes over a 15-year life.

        With approximately $17.0 billion of assets under management, Yacktman specializes in large-cap equities through a unique, value-oriented approach. The Company's purchase price allocation is provisional and was performed using a financial model that includes assumptions of expected market performance, net client cash flows and discount rates. These provisional amounts may be revised upon completion of the final valuation. The excess of the enterprise value over the net assets acquired was recorded as goodwill, of which 91% and 9% was attributed to the Company's Mutual Fund and High Net Worth segments, respectively. The consideration paid (less net tangible assets acquired) will be deductible for U.S. tax purposes over a 15-year life. As part of this investment, the Company is contingently liable to make payments of up to $75.0 million over the next three to five years upon the achievement of specified revenue targets. The Company projects contingent payments totaling $52.6 million, and as of June 30, 2012, the present value of these payments was $24.8 million.

        The provisional purchase price allocations for these investments are as follows:

 
   Veritable   Yacktman  

Consideration paid

   $ 116.8   $ 301.0  

Non-controlling interests

     30.8     213.3  

Contingent payment obligations

     —     24.8  
           

Enterprise value

   $ 147.6   $ 539.1  
           

Acquired client relationships

   $ 85.1   $ 367.5  

Tangible assets, net

     2.7     9.0  

Goodwill

     59.8     162.6  
           

 

   $ 147.6   $ 539.1  
           

        Unaudited pro forma financial results are set forth below, giving consideration to the Veritable and Yacktman investments, as if such transactions occurred as of January 1, 2011, assuming the revenue sharing arrangements had been in effect for the entire period and after making certain other pro forma adjustments.

 
   For the Six Months
Ended June 30, 		 
 
   2011   2012  

Revenue

   $ 936.6   $ 922.7  

Net income (controlling interest)

     90.8     56.0  

Earnings per share—basic

   $ 1.75   $ 1.09  

Earnings per share—diluted

   $ 1.70   $ 1.06  

        The unaudited pro forma financial results are not necessarily indicative of the financial results had the investments been consummated at the beginning of the periods presented, nor are they necessarily indicative of the financial results expected in future periods. The pro forma financial results do not include the impact of transaction and integration related costs or benefits that may be expected to result from these investments.

        Veritable and Yacktman's contribution to the Company's revenue and earnings in the quarter ended June 30, 2012 was not significant.