Acquisitions (Notes)

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisitions

 Acquisitions

We continue to evaluate strategic opportunities to expand our industry expertise, strengthen our position in high-growth and key strategic geographical markets and industry sectors, advance technological capabilities and improve operational efficiency through both acquisitions and increased ownership interests in current investments. Our acquisitions typically provide for an initial payment at the time of closing and additional contingent purchase price payments based on the future performance of the acquired entity. We have entered into agreements that may require us to purchase additional equity interests in certain consolidated and unconsolidated subsidiaries. The amounts at which we record these transactions in our financial statements are based on estimates of the future financial performance of the acquired entity, the timing of the exercise of these rights, changes in foreign currency exchange rates and other factors.

For companies acquired, we estimate the fair values of the assets and liabilities based on 100% of the business for consolidation. The purchase price in excess of the estimated fair value of the tangible net assets acquired is allocated to identifiable intangible assets and then to goodwill. Due to the characteristics of advertising, specialized marketing and communication services companies, our acquisitions typically do not have significant amounts of tangible assets since the principal assets we acquire are client relationships and talent. As a result, a substantial portion of the purchase price is primarily allocated to customer lists, trade names and goodwill.

For acquisitions we record deferred payment and redeemable noncontrolling interest amounts on our Consolidated Balance Sheets based on their acquisition-date fair value. Deferred payments are recorded on a discounted basis and adjusted quarterly, if necessary, through operating income or net interest expense, depending on the nature of the arrangement, for both changes in estimate and accretion between the acquisition date and the final payment date. See Note 13 for further information on contingent acquisition obligations. Redeemable noncontrolling interests are adjusted quarterly to their estimated redemption value, but not less than their initial fair value. Any adjustments to the redemption value impacts retained earnings, except for foreign currency translation adjustments. The following table presents changes in our redeemable noncontrolling interests.

	Years ended December 31,
	2016			2015			2014
Balance at beginning of period	$	251.9		$	257.4		$	249.1
Change in related noncontrolling interest balance	4.9			0.8			3.2
Changes in redemption value of redeemable noncontrolling interests:
Additions	6.8			16.5			18.7
Redemptions and reclassifications	(14.8		)	(25.1		)	(7.9		)
Redemption value adjustments	4.0			2.3			(5.7		)
Balance at end of period	$	252.8		$	251.9		$	257.4

For all acquisitions, if a portion of the deferred payments and purchases of additional interests after the effective date of purchase are contingent upon employment terms, then that amount is accounted for separately from the business combination and recognized as compensation expense over the required earn-out period. Payments deemed as compensation are excluded from the fair value purchase price allocation to tangible net assets and intangible assets acquired.

During 2016, we completed ten acquisitions, three of which were included in the Integrated Agency Networks ("IAN") operating segment, and seven of which were included in the Constituency Management Group ("CMG") operating segment. The most significant acquisitions include a product and service design consultancy based in the U.S., an integrated healthcare marketing communications agency based in the U.S., a content creation and digital agency with offices in the U.S. and the U.K., a mobile consultancy and application development agency based in the U.K., a full-service public relations and digital agency based in China, a search engine optimization and digital content marketing agency based in the U.K., and a mobile focused digital agency based in the U.K. During 2016, we recorded approximately $149.0 of goodwill and intangible assets related to our acquisitions.

During 2015, we completed five acquisitions, four of which were included in the IAN operating segment, and one of which was included in the CMG operating segment. The most significant acquisitions include a full-service digital agency in the U.K., a group of creative marketing agencies based in Russia, and a media planning and buying agency with significant digital capabilities in Canada. During 2015, we recorded approximately $61.0 of goodwill and intangible assets related to these acquisitions.

During 2014, we completed eight acquisitions, six of which were included in the IAN operating segment, and two of which were included in the CMG operating segment. The most significant acquisitions included a global full-service digital agency, a digital agency in the United States and a search marketing agency in the Netherlands. During 2014, we recorded approximately $185.0 of goodwill and intangible assets related to these acquisitions.

The results of operations of our acquired companies were included in our consolidated results from the closing date of each acquisition. We did not make any payments in stock related to our acquisitions in 2016, 2015 or 2014.

Details of cash paid for current and prior years' acquisitions are listed below.

	Years ended December 31,
	2016			2015			2014
Cost of investment: current-year acquisitions	$	65.7		$	37.8		$	97.3
Cost of investment: prior-year acquisitions	40.7			53.1			14.0
Less: net cash acquired	(13.6		)	(9.2		)	(29.9		)
Total cost of investment	92.8			81.7			81.4
Operating expense 1	19.1			18.4			3.4
Total cash paid for acquisitions 2	$	111.9		$	100.1		$	84.8

1 Represents cash payments made that were either in excess of the initial value of contingent payments or contingent upon the future employment of the former owners of the acquired companies and are recorded in the operating section of the Consolidated Statements of Cash Flows.

2 Of the total cash paid for acquisitions, $52.0, $28.6 and $67.8 for the years ended December 31, 2016, 2015 and 2014, respectively, are classified under the investing section of the Consolidated Statements of Cash Flows as acquisitions, net of cash acquired. These amounts relate to initial payments for new transactions. Of the total cash paid for acquisitions, $40.8, $53.1 and $13.6 for the years ended December 31, 2016, 2015 and 2014, respectively, are classified under the financing section of the Consolidated Statements of Cash Flows as acquisition-related payments. These amounts relate to deferred payments and increases in our ownership interest for prior acquisitions.