GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2018

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 8—GOODWILL AND OTHER INTANGIBLE ASSETS

Activity related to goodwill for the six months ended June 30, 2018 and 2017 follows:


	Six Months Ended June 30,
(in thousands)	2018		2017
Beginning balance	$	123,767	$	96,420
Additions from acquisitions		29,957		27,347
Impairment		—		—
Ending balance	$	153,724	$	123,767

The addition from acquisitions during the six months ended June 30, 2018 shown in the table above relates to an immaterial acquisition completed on April 12, 2018. The Company purchased 100% of the equity interests of JCR for $35.0 million in cash consideration. Prior to the acquisition, JCR was a privately held, SEC-registered investment advisor focused on the management of debt, preferred equity, and mezzanine equity investments in middle-market commercial real estate funds. The acquisition is part of the Company’s strategy to grow and diversify the Company by building out an investment management platform and growing assets under management.

A significant portion of the value associated with JCR related to its assembled workforce and investment management platform, resulting in $30.0 million of goodwill. The Company expects none of the goodwill to be tax deductible. The other assets acquired included investment management contract intangible assets of $2.4 million, which was determined using the income approach (Level 3), $4.2 million of accounts receivable, which was determined using the market approach (Level 2), and immaterial balances related to other intangible assets and other assets. Liabilities assumed were immaterial. The Company allocated the purchase price to the assets acquired, separately identifiable intangible assets, and liabilities assumed based on their estimated acquisition-date fair values. The residual amount of the consideration transferred less the net assets acquired was recognized as goodwill. The operations of JCR have been merged into the Company’s existing operations. The goodwill resulting from the acquisition of JCR is allocated to the Company’s one reporting unit. Total revenues and income from operations related to JCR since the acquisition and the pro-forma incremental revenues and earnings related to JCR as if the JCR acquisition had occurred as of January 1, 2017 are immaterial. The Company has not completed the accounting for the JCR transaction as it is still waiting for (i) certain tax information from JCR’s final 2017 and partial-year 2018 tax returns and (ii) working capital adjustments to be finalized.

As of June 30, 2018, the Company has fully amortized all material intangible assets obtained from acquisitions prior to the JCR acquisition. As of June 30, 2018, the balance of intangible assets acquired in the JCR acquisition was $2.8 million, which will be amortized evenly over approximately the next five years. During the six months ended June 30, 2018, the Company paid $5.2 million to settle the contingent consideration liability from the first of three annual earn-out periods. No payments were made during the six months ended June 30, 2017. The balance of contingent consideration liabilities as of June 30, 2018 and 2017 was $9.4 million and $14.1 million, respectively, and consisted primarily of the amount initially recorded upon acquisition in the first quarter of 2017.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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