Business Changes and Developments

Business Developments

Real Estate Capital Advisory - On April 23, 2018, the Company announced the expansion of its global investment banking platform by establishing a Real Estate Capital Advisory business within its existing Private Capital Advisory L.P. ("PCA") business. This business is focused on primary and secondary transactions for real estate oriented financial sponsors and private equity investors in conjunction with PCA’s existing fund monetization and recapitalization expertise. Certain Real Estate Capital Advisory ("RECA") employees purchased interests in PCA, at fair value, resulting in an increase to Noncontrolling Interest of $770 on the Company's Consolidated Statement of Financial Condition as of December 31, 2018. See Note 16 for further information.

In conjunction with the establishment of the RECA business, the Company hired certain employees and entered into an arrangement with the former employer of these employees, which, among other things, provides for contingent consideration to be paid to the former employer of up to $4,463, based on the completion of certain client engagements. The Company accounted for this transaction as an asset acquisition and has recognized the contingent consideration paid as an expense in Professional Fees on the Company's Consolidated Statements of Operations as the related revenue from the underlying engagements is realized. The Company recognized expenses of $3,971 pursuant to this arrangement for the year ended December 31, 2018.

The Company is the general partner of PCA. Concurrent with this transaction, the Company performed an assessment under ASC 810, and concluded that PCA remains a VIE following this transaction and determined that the Company is still the primary beneficiary of this VIE. Specifically, the Company's general partner interest provides the Company with the ability to make decisions that significantly impact the economic performance of PCA, while the limited partners do not possess substantive participating rights over PCA. The Company's assessment of the primary beneficiary included assessing which parties have the power to significantly impact the economic performance and the obligation to absorb losses, which could be potentially significant to the entity, or the right to receive benefits from the entity that could be potentially significant. The assets of PCA are not generally available to the Company and the liabilities are generally non-recourse to the Company.

Evercore Trust Company Transaction - On October 18, 2017, the Company sold the Institutional Trust and Independent Fiduciary business of Evercore Trust Company, N.A. ("ETC"), which was a part of its Investment Management segment, for an adjusted purchase price of $34,842, including contingent consideration of $488. As a result of this transaction, the Company deconsolidated assets and liabilities of $28,523 and $1,489, respectively. The assets were primarily comprised of $28,442 of goodwill, representing an allocation of goodwill based on the relative fair value of the business being sold to the total fair value of the Institutional Asset Management reporting unit. This transaction resulted in a pre-tax gain on the sale of $7,808 included in Other Revenue, Including Interest and Investments, on the Consolidated Statement of Operations for the year ended December 31, 2017. In conjunction with the sale, the Company incurred $3,930 of Special Charges, related to the transition of certain employees of the sold business. Following the sale of the Institutional Trust and Independent Fiduciary business of ETC, the remaining operations of ETC were combined within the EWM operating segment.

G5 Transaction - On December 31, 2017, the Company exchanged all of its outstanding equity interests in G5 for debentures of G5. These debentures were issued by G5 at a redemption value of $60 million Brazilian real and are mandatorily redeemable on December 31, 2027, or earlier, subject to the occurrence of certain events. The Company will earn an annual coupon based on a percentage of revenues earned by G5 and G5 may be required to pre-pay a portion of the outstanding debentures subject to the achievement of certain revenue thresholds over the life of the debentures. The Company is entitled to one of six seats on the board of G5.

The Company recorded its investment in G5 as a held-to-maturity debt security of $10,995 within Investments on the Consolidated Statement of Financial Condition as of December 31, 2017, representing the fair value of the debentures at the date of the exchange, and will accrete its investment to its redemption value ratably from December 31, 2017 to December 31, 2027. The fair value of the debentures was determined to be approximately $37 million Brazilian real, which the Company determined was equivalent to the carrying value of the Company’s equity method investment in G5 at the time of the exchange. This transaction resulted in the reclassification of $16,266 of cumulative foreign currency translation losses in Accumulated Other Comprehensive Income (Loss) on the Consolidated Statement of Financial Condition to Other Revenue, Including Interest and Investments, on the Consolidated Statement of Operations for the year ended December 31, 2017. See Note 10 for further information.

Goodwill and Intangible Assets

Goodwill associated with the Company's acquisitions is as follows:



	Investment Banking			Investment Management			Total
Balance at December 31, 2016⁽¹⁾	$	114,489		$	46,472		$	160,961
Impairment of Goodwill	—			(7,107		)	(7,107		)
Sale of the Institutional Trust and Independent Fiduciary business of ETC	—			(28,442		)	(28,442		)
Foreign Currency Translation and Other	8,819			—			8,819
Balance at December 31, 2017⁽²⁾	123,308			10,923			134,231
Foreign Currency Translation and Other	(2,844		)	—			(2,844		)
Balance at December 31, 2018⁽²⁾	$	120,464		$	10,923		$	131,387

(1) The amount of the Company's goodwill before accumulated impairment losses of $28,500 was $189,461 at December 31, 2016.

(2) The amount of the Company's goodwill before accumulated impairment losses of $35,607 was $166,994 and $169,838 at December 31, 2018 and 2017, respectively.

Intangible assets associated with the Company's acquisitions are as follows:



	December 31, 2018
	Gross Carrying Amount						Accumulated Amortization
	Investment Banking		Investment Management		Total		Investment Banking		Investment Management		Total
	Investment Banking		Investment Management		Total		Investment Banking		Investment Management		Total
Client Related	$	42,000	$	3,830	$	45,830	$	35,356	$	2,360	$	37,716
Other	5,320		445		5,765		3,167		334		3,501
Total	$	47,320	$	4,275	$	51,595	$	38,523	$	2,694	$	41,217

	December 31, 2017
	Gross Carrying Amount						Accumulated Amortization
	Investment Banking		Investment Management		Total		Investment Banking		Investment Management		Total
	Investment Banking		Investment Management		Total		Investment Banking		Investment Management		Total
Client Related	$	42,000	$	3,830	$	45,830	$	27,355	$	1,977	$	29,332
Other	5,320		445		5,765		2,407		279		2,686
Total	$	47,320	$	4,275	$	51,595	$	29,762	$	2,256	$	32,018

Expense associated with the amortization of intangible assets was $9,199, $9,793 and $11,640 for the years ended December 31, 2018, 2017 and 2016, respectively.

Based on the intangible assets above, as of December 31, 2018, annual amortization of intangibles for each of the next five years is as follows:



2019	$	7,866
2020	$	1,182
2021	$	996
2022	$	334
2023	$	—

At November 30, 2018, in accordance with ASC 350, the Company performed its annual goodwill impairment assessment. The Company concluded that the fair value of the reporting units substantially exceeded their carrying values as of November 30, 2018, with the exception of the Institutional Asset Management reporting unit, which exceeded its carrying value by approximately 14% as of November 30, 2018. Goodwill on the Consolidated Statements of Financial Condition includes $3,396 related to the Institutional Asset Management reporting unit as of December 31, 2018.

Impairments of Goodwill

During the second quarter of 2017, in accordance with ASC 350, the Company performed an impairment assessment of the goodwill remaining in the Institutional Asset Management reporting unit following the classification of the Institutional Trust and Independent Fiduciary business of ETC as Held for Sale. In determining the fair value of this reporting unit, the Company utilized both a market multiple approach and a discounted cash flow methodology based on the adjusted cash flows from operations. The market multiple approach included applying the average earnings multiples of comparable public companies, multiplied by the forecasted earnings of the reporting unit, to yield an estimate of fair value.

As a result of the above analysis, the Company determined that the fair value of the remaining business in the Institutional Asset Management reporting unit was less than its carrying value. The Company adopted ASU 2017-04 during the second quarter of 2017. Accordingly, the Company recorded a goodwill impairment charge in the Investment Management segment of $7,107, which is included within Special Charges on the Consolidated Statement of Operations for the year ended December 31, 2017. This charge resulted in a decrease of $3,694 to Net Income Attributable to Evercore Inc. (after adjustments for noncontrolling interest and income taxes) for the year ended December 31, 2017.