Goodwill and Acquired Client Relationships

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Client Relationships

The following tables present the changes in the Company’s consolidated Affiliates’ Goodwill and components of Acquired client relationships (net):


	Goodwill
	2019		2020
Balance, beginning of period	$	2,633.4	$	2,651.7


Foreign currency translation	18.3		11.6
Other	—		(1.9)
Balance, end of period	$	2,651.7	$	2,661.4

As of September 30, 2020, the Company completed its impairment assessment on goodwill and no impairment was indicated.


	Acquired Client Relationships (Net)
	Definite-lived						Indefinite-lived		Total
	Gross Book Value		Accumulated Amortization		Net Book Value		Net Book Value		Net Book Value
Balance, as of December 31, 2018	$	1,279.8	$	(976.2)	$	303.6	$	1,006.3	$	1,309.9

Intangible amortization and impairments	—		(93.4)		(93.4)		(51.1)		(144.5)
Foreign currency translation	5.1		(5.5)		(0.4)		17.0		16.6
Transfers(1)	(36.1)		36.1		—		—		—
Balance, as of December 31, 2019	$	1,248.8	$	(1,039.0)	$	209.8	$	972.2	$	1,182.0

Intangible amortization and impairments	—		(69.8)		(69.8)		(70.7)		(140.5)
Foreign currency translation	3.5		(3.7)		(0.2)		7.5		7.3
Transfers(1)	(85.7)		85.7		—		—		—
Balance, as of December 31, 2020	$	1,166.6	$	(1,026.8)	$	139.8	$	909.0	$	1,048.8

__________________________

(1)Transfers include acquired client relationships at Affiliates that were deconsolidated during the period.

Definite-lived acquired client relationships at the Company’s consolidated Affiliates are amortized over their expected period of economic benefit. The Company recorded amortization expense in Intangible amortization and impairments for these relationships of $114.4 million, $93.4 million and $55.3 million for the years ended December 31, 2018, 2019 and 2020, respectively. Based on relationships existing as of December 31, 2020, the Company estimates that its consolidated amortization expense will be approximately $30 million in each of 2021, 2022, and 2023, approximately $20 million in 2024 and approximately $10 million in 2025.

In the fourth quarter of 2019, the Company completed an impairment assessment of the indefinite-lived acquired client relationships at one of its Affiliates, and determined that the fair value of the asset had declined below its carrying value. Accordingly, the Company recorded an expense in Intangible amortization and impairments of $31.2 million attributable to the controlling interest ($35.0 million in aggregate) to reduce the carrying value of the asset to fair value. The decline in the fair value was a result of a projected decline in assets under management that decreased the forecasted revenue associated with the asset. The fair value of the asset was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected growth rate of (9)% for assets under management, discount rate of 14.5% for asset based fees, and a market participant tax rate of 25%. No other impairments of indefinite-lived acquired client relationships were indicated.

In addition, in the fourth quarter of 2019, the Company recorded an expense in Intangible amortization and impairments of $16.1 million attributable to the controlling interest and in aggregate to reduce the carrying value of an indefinite-lived acquired client relationship to zero due to the closure of certain retail investment products on its U.S. retail distribution platform.

In the second quarter of 2020, the Company agreed with a consolidated Affiliate to strategically reposition their business and to sell its equity interest in the Affiliate. The Company recorded an expense in Intangible amortization and impairments of $32.8 million attributable to the controlling interest ($60.3 million in aggregate) to reduce the carrying value of the Affiliate’s acquired client relationships to zero as of June 30, 2020. In the third quarter of 2020, the Company sold its interest in the Affiliate and the Company recorded no significant gain or loss on the transaction.

In the third quarter of 2020, the Company completed an impairment assessment of the indefinite-lived acquired client relationships at one of its Affiliates, and determined that the fair value of the asset had declined below its carrying value. Accordingly, the Company recorded an expense in Intangible amortization and impairments of $12.5 million attributable to the controlling interest ($14.0 million in aggregate) to reduce the carrying value of the asset to fair value. The decline in the fair value was a result of a projected decline in assets under management that decreased the forecasted revenue associated with the asset. The fair value of the asset was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected growth rate of (14)% for assets under management, discount rate of 15% for asset based fees, and a market participant tax rate of 25%.

In addition, in the third quarter of 2020, the Company recorded an expense in Intangible amortization and impairments of $7.4 million attributable to the controlling interest ($10.9 million in aggregate) to reduce the carrying value of an indefinite-lived acquired client relationship to zero due to the closure of one of its Affiliate’s retail investment products.

As of December 31, 2020, no other impairments of indefinite-lived acquired client relationships were indicated. If financial markets become depressed for a prolonged period as a result of the novel coronavirus global pandemic (“COVID-19”) or other factors, the fair values of these assets could drop below their carrying values resulting in future impairments.