Acquisition and Restructuring

12 Months Ended

Dec. 31, 2019

NOTE 2—ACQUISITIONS AND RESTRUCTURING

Gradifi Acquisition

On December 9, 2019, the Company completed its acquisition of Gradifi, a student loan and financial wellness provider, for a purchase price of $30 million. The acquisition is expected to complement the Company's corporate services offering to include financial wellness and student loan solutions as part of a comprehensive benefits platform integrated into the Company's stock plan administration offering.

The results of Gradifi's operations have been included in the Company's consolidated statements of income for the year ended December 31, 2019 from the date of acquisition. Supplementary pro forma financial information related to the acquisition is not included because the impact to the Company's consolidated statements of income is not material.

The following table summarizes the allocation of the purchase price to the net assets of Gradifi as of December 9, 2019 (dollars in millions):



	December 9, 2019
Purchase price	$	30
Fair value of net assets acquired	5
Goodwill	$	25

The following table summarizes the fair value of assets acquired and liabilities assumed at the date of acquisition (dollars in millions):



	December 9, 2019
Assets
Other intangibles	$	3
Other⁽¹⁾	5
Total assets acquired	8
Liabilities
Other liabilities	3
Total liabilities assumed	3
Net assets acquired	$	5


(1)	Includes balance sheet line items cash and equivalents, property and equipment, net and other assets.

The goodwill of $25 million includes synergies expected to result from combining operations with Gradifi to enhance the Company's existing product offerings. The goodwill is not deductible for tax purposes. The Company also recorded technology intangible assets of $3 million, which are subject to amortization over an estimated useful life of 6 years. The fair value of the intangible assets was determined under the income approach. The intangible assets are not deductible for tax purposes.

Capital One Accounts Acquisition

On November 6, 2018, the Company completed its acquisition of approximately one million retail brokerage accounts from Capital One for $109 million in cash. The Company recorded a customer relationships intangible asset of $114 million at acquisition, which includes the purchase price plus transaction costs. The fair value of the customer relationships intangible asset was determined using the multi-period excess

earnings method, a discounted cash flow method, and the related asset is subject to amortization over an estimated useful life of 11 years.

Trust Company of America Acquisition

On April 9, 2018, the Company completed its acquisition of TCA for $275 million in cash. The Company recorded goodwill of $115 million which primarily includes the synergies expected to result from combining operations with TCA, coupling its custody platform with the Company's existing product offerings and leveraging customer relationships with RIAs. The Company also recorded intangible assets of $140 million, which are subject to amortization over their estimated useful lives.

The following table summarizes the fair value and estimated useful lives of the intangible assets at the date of acquisition (dollars in millions):



	Estimated Fair Value		Estimated Useful Life (In Years)
Customer Relationships	$	119	22
Technology	20		5
Trade name	1		2
Total intangible assets	$	140

Restructuring and Acquisition-related Activities Expense

The following table shows the components of restructuring and acquisition-related activities expense (dollars in millions):



	Year Ended December 31,
	2019		2018		2017
Restructuring activities	$	21	$	4	$	12
Acquisition-related costs	2		3		3
Total restructuring and acquisition-related activities	$	23	$	7	$	15

Restructuring and acquisition-related activities during the year ended December 31, 2019 includes $9 million of expenses associated with the exit of our New York headquarters and $12 million of severance resulting from organizational changes driven by an enterprise-wide cost containment initiative. See Note 19—Lease Arrangements for additional information. Also included are acquisition-related costs associated with the Gradifi acquisition as discussed above. Restructuring and acquisition-related costs during the year ended December 31, 2018 relate primarily to costs incurred in connection with the restructuring of our regulatory and enterprise risk management functions due to bank regulatory reform and the closing of the TCA acquisition. Restructuring and acquisition-related costs during the year ended December 31, 2017 related primarily to costs incurred in connection with the integration of OptionsHouse.