Discontinued Operations

3 Months Ended

Mar. 31, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On February 9, 2017, the Company entered into the Purchase Agreement with Tempo Acquisition, LLC to sell its benefits administration and business process outsourcing business (the “Divested Business”) to the Buyer, an entity formed and controlled by affiliates of The Blackstone Group L.P., and certain designated purchasers that are direct or indirect subsidiaries of the Buyer.

On May 1, 2017, the Buyer purchased all of the outstanding equity interests of the Divested Business, plus certain related assets, for a purchase price of (i) $4.3 billion in cash paid at closing, subject to customary adjustments set forth in the Purchase Agreement, and (ii) deferred consideration of up to $500 million, plus the assumption of certain liabilities. Cash proceeds from the sale, before taxes and after customary adjustments as set forth in the Purchase Agreement, were $4.2 billion.

Aon and the Buyer entered into certain related transaction agreements at the closing, including two commercial agreements, a transition services agreement, certain intellectual property license agreements, sub-leases and other customary agreements. Aon expects to continue to be a significant client of the Divested Business and the Divested Business has agreed to use Aon for its broking and other services for a specified period of time.

In the second quarter of 2017, the Company expects to record a gain on sale, net of taxes, of approximately $500 million and a non-cash impairment charge to its indefinite lived tradename associated with the Divested Business of approximately $400 million as this asset was not sold to the Buyer.

The Company has classified the results of the Divested Business as discontinued operations in the Company’s Condensed Consolidated Statements of Income for all periods presented. Additionally, the assets and liabilities of the Divested Business are classified as discontinued operations in the Company’s Condensed Consolidated Statements of Financial Position. These assets and liabilities are classified as current in the Company’s Condensed Consolidated Statements of Financial Position as of March 31, 2017 as the Company closed the Transaction within one year.

The financial results of the Divested Business for the three months ended March 31, 2017 and 2016 are presented as Income from discontinued operations on the Company’s Condensed Consolidated Statements of Income. The following table presents financial results of the Divested Business (in millions):

	Three Months Ended
	March 31, 2017		March 31, 2016
Revenue
Total Revenue	$	527	$	529
Expenses
Total Operating Expenses (1)	470		486
Income from discontinued operations before income taxes	57		43
Income taxes	17		18
Income from discontinued operations, net of tax	$	40	$	25

(1) Upon triggering held for sale criteria in February 2017, Aon ceased depreciating and amortizing all long-lived assets included in discontinued operations. Specifically, included within Total operating expenses was $8 million and $18 million, respectively, of depreciation of fixed assets and $11 million and $30 million, respectively, of intangible asset amortization for the three months ended March 31, 2017 and 2016.

The following table presents the aggregate carrying amounts of the classes of assets and liabilities presented as discontinued operations within the Company’s Condensed Consolidated Statements of Financial Position (in millions):

	March 31, 2017		December 31, 2016
ASSETS
Cash and cash equivalents	$	18	$	5
Receivables, net	412		483
Fiduciary assets	591		526
Goodwill	1,338		1,337
Intangible assets, net	322		333
Fixed assets, net	222		215
Other assets	283		295
TOTAL ASSETS	$	3,186	$	3,194
LIABILITIES
Accounts payable and accrued liabilities	$	114	$	197
Fiduciary liabilities	591		526
Other liabilities	331		356
TOTAL LIABILITIES	$	1,036	$	1,079

The Company’s Condensed Consolidated Statements of Cash Flows present the operating, investing, and financing cash flows of the Divested Business as discontinued operations.  Aon uses a centralized approach to cash management and financing of its operations. Prior to the close of the Transaction, portions of the Divested Business’s cash were transferred to Aon daily, and Aon would fund the Divested Business as needed.