Acquisitions

12 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Yieldbroker

On August 31, 2023, the Company completed its acquisition of all of the outstanding equity interests of Tradeweb Australia Pty Ltd (Tradeweb Australia Pty Ltd changed its name from Yieldbroker Pty Limited in January 2024). The all-cash purchase price of A$123.6 million ($80.1 million U.S. dollars as translated as of August 31, 2023) was net of cash acquired and prior to working capital and other closing adjustments. During the fourth quarter of 2023, the Company recorded final working capital and purchase price adjustments which resulted in a $0.5 million increase in total assets, a $0.4 million decrease in total liabilities and a $0.1 million increase in total cash paid.

Tradeweb Australia Pty Ltd is a corporation registered under the Corporations Act 2001 in Australia and a Tier 1 Australian Markets Licensee in Australia, regulated by the ASIC, that maintains a branch in Singapore which is regulated by the MAS as a Regulated Market Operator. Yieldbroker operates a leading Australian trading platform for Australian and New Zealand government bonds and interest rate derivatives, covering the institutional and wholesale client sectors.

The acquisition was accounted for as a business combination and the Company utilized the assistance of a third-party valuation specialist to determine the fair value of the assets acquired and liabilities assumed at the date of the closing of the acquisition. The fair values were determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market and primarily included significant unobservable inputs (Level 3). Customer relationships were valued using the income approach, specifically a multi-period excess earnings method. The excess earnings method examines the economic returns contributed by the identified tangible and intangible assets of a company, and then examines the excess return that is attributable to the intangible asset being valued. The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the customer relationships relative to the overall business. In developing a discount rate for the customer relationships, the Company estimated a weighted-average cost of capital for the overall business and employed an intangible asset risk premium to this rate when discounting the excess earnings related to customer relationships. The resulting discounted cash flows were then tax-affected at the applicable statutory rate.

The final purchase price was allocated as follows:


	Purchase Price Allocation

	(in thousands)
Cash and cash equivalents	$	12,753

Accounts receivable	1,900
Equipment	384
Lease right-of-use assets	1,453
Software development costs	588
Goodwill	35,265
Intangible assets – Customer relationships	39,746
Intangible assets – Tradename	492
Deferred tax asset	3,361
Other assets	693
Accrued compensation	(3,577)
Deferred revenue	(72)
Accounts payable, accrued expenses and other liabilities	(9,025)
Lease liabilities	(1,496)
Total cash paid	82,465
Less: Cash acquired	(12,753)
Less: Working capital and other closing adjustments	10,368
Purchase price, net of cash acquired and excluding working capital and other closing adjustments	$	80,080

The acquired software development costs will be amortized over a useful life of one year, the acquired tradename will be amortized over a useful life of four years and the customer relationships will be amortized over a useful life of 13 years. The goodwill recognized in connection with the Yieldbroker Acquisition is primarily attributable to the acquisition of an assembled workforce and expected future customers, future technology and synergies from the integration of the operations of Yieldbroker into the Company's operations and its single business segment. All of the goodwill recognized in connection with the Yieldbroker Acquisition is expected to be deductible for income tax purposes.

During the year ended December 31, 2023, the Company recognized $2.3 million in transaction costs incurred to effect the Yieldbroker Acquisition, which are included as a component of professional fees in the accompanying consolidated statements of income. During the year ended December 31, 2023, the Company also recognized $0.9 million in transaction costs incurred to effect the Yieldbroker Acquisition, which are included as a component of general and administrative expenses in the accompanying consolidated statements of income. There were no acquisitions completed during the year ended December 31, 2022. During the year ended December 31, 2021, the Company recognized $5.1 million in transaction costs incurred to effect the NFI Acquisition, which are included as a component of professional fees in the accompanying consolidated statements of income.

The Yieldbroker Acquisition was not material to the Company’s consolidated financial statements and therefore pro forma and current period results of this acquisition have not been presented.

On June 1, 2023, the Company entered into a foreign currency call option on Australian dollars, giving the Company an option to buy A$120.7 million, in order to partially mitigate the Company’s U.S. dollar versus Australian dollar foreign exchange exposure on the then-anticipated payment of the Australian dollar denominated purchase price for the Yieldbroker Acquisition. The counterparty on the foreign currency call option contract was an affiliate of LSEG. On August 25, 2023, the Company unwound the out-of-the-money foreign currency call option and received $1.1 million from an affiliate of LSEG. Realized losses on the Australian dollar call option during the year ended December 31, 2023 totaled $1.3 million, which is included within other income/loss in the accompanying consolidated statements of income. See Note 15 – Fair Value of Financial Instruments for additional details.

r8fin

On November 16, 2023, TWM LLC and the Corporation entered into a definitive agreement for TWM LLC to acquire all of the outstanding equity interests of R8FIN Holdings LP (together with its subsidiaries, “r8fin”) in exchange for total consideration of $125 million, consisting of $90 million in cash and $35 million in shares of Class A common stock of the Corporation, subject to working capital and other adjustments. r8fin provides a suite of algorithmic-based tools as well as a thin-client execution management system (EMS) trading application to facilitate futures and cash trades. The solutions complement Tradeweb’s existing Dealerweb Active Streams, Dealerweb Central Limit Order Book (CLOB), Tradeweb Request-for-Quote (RFQ) and Tradeweb AiEX (Automated Intelligent Execution) offerings. The acquisition closed on January 19, 2024, following the satisfaction of closing conditions and regulatory reviews. On the closing date, the Corporation issued a total of 374,601 shares of Class A common stock as partial consideration for the acquisition.