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Goodwill and other intangible assets (Policies)
 9 Months Ended
Sep. 30, 2024
Goodwill impaired [Abstract]  
Goodwill and other intangible assets
The Corporation’s goodwill and
 
other identifiable intangible assets having
 
an indefinite useful life
 
are tested for impairment,
 
at least
annually and
 
on a
 
more frequent basis
 
if events
 
or circumstances indicate
 
impairment could have
 
taken place. Such
 
events could
include,
 
among others,
 
a significant
 
adverse change
 
in the
 
business climate,
 
an adverse
 
action by
 
a regulator,
 
an unanticipated
change in the competitive environment and a decision
 
to change the operations or dispose of a
 
reporting unit.
 
Management
 
monitors
 
events
 
or
 
changes
 
in
 
circumstances
 
between
 
annual
 
tests
 
to
 
determine
 
if
 
these
 
events
 
or
 
changes
 
in
circumstances would more likely than not reduce
 
the fair value of its reporting units below their carrying
 
amounts.
The Corporation
 
performed the
 
annual goodwill
 
impairment evaluation
 
for the
 
entire organization
 
during the
 
third quarter
 
of 2024
using July 31, 2024 as the annual evaluation date. The reporting units
 
utilized for this evaluation were those that are one level below
the business segments,
 
which are the
 
legal entities within the
 
reportable segment. The Corporation
 
follows push-down accounting,
as such all goodwill is assigned to the reporting
 
units when carrying out a business combination.
In determining the fair value of each reporting unit, the Corporation generally uses a combination of methods, including market price
multiples
 
of
 
comparable
 
companies
 
and
 
transactions,
 
as
 
well
 
as
 
discounted
 
cash
 
flow
 
analysis.
 
Management
 
evaluates
 
the
particular circumstances
 
of each
 
reporting unit
 
in order
 
to determine
 
the most
 
appropriate valuation methodology
 
and the
 
weights
applied
 
to
 
each
 
valuation
 
methodology,
 
as
 
applicable.
 
The
 
Corporation
 
evaluates
 
the
 
results
 
obtained
 
under
 
each
 
valuation
methodology to
 
identify and
 
understand the
 
key
 
value drivers
 
in order
 
to
 
ascertain that
 
the
 
results obtained
 
are
 
reasonable and
appropriate
 
under
 
the
 
circumstances.
 
Elements
 
considered
 
include
 
current
 
market
 
and
 
economic
 
conditions,
 
developments
 
in
specific lines of business, and any particular
 
features in the individual reporting units.
 
The computations
 
require management
 
to make
 
estimates and
 
assumptions. Critical
 
assumptions that
 
are used
 
as part
 
of these
evaluations include:
●
 
a selection of comparable publicly traded companies,
 
based on nature of business, location and
 
size;
●
 
a selection of comparable acquisitions;
●
 
the discount rate applied to future earnings, based
 
on an estimate of the cost of equity;
●
 
the potential future earnings of the reporting unit;
 
and
●
 
the market growth and new business assumptions.
For
 
purposes
 
of
 
the
 
market
 
comparable
 
companies’
 
approach,
 
valuations
 
were
 
determined
 
by
 
calculating
 
price
 
multiples
 
(using
averages or applying regression analyses) of relevant value drivers from a
 
group of companies that are comparable to the reporting
unit being analyzed and
 
applying those price multiples
 
to the value drivers
 
of the reporting unit.
 
Management uses judgment in
 
the
determination
 
of
 
which
 
value
 
drivers
 
are
 
considered
 
more
 
appropriate
 
for
 
each
 
reporting
 
unit.
 
Comparable
 
companies’
 
price
multiples represent minority-based multiples and thus, a control premium adjustment is added to the comparable
 
companies’ market
multiples applied to the reporting unit’s value drivers.
 
For purposes
 
of the
 
market comparable transactions’
 
approach, valuations had
 
been previously determined
 
by the
 
Corporation by
calculating
 
average
 
price
 
multiples
 
of
 
relevant
 
value
 
drivers
 
from
 
a
 
group
 
of
 
transactions
 
for
 
which
 
the
 
target
 
companies
 
are
comparable to the reporting unit being analyzed and
 
applying those price multiples to the value drivers
 
of the reporting unit.
For purposes
 
of the
 
discounted cash flows
 
(“DCF”) approach, the
 
valuation is
 
based on
 
estimated future cash
 
flows. The
 
financial
projections
 
used
 
in
 
the
 
DCF
 
valuation
 
analysis
 
for
 
each
 
reporting
 
unit
 
are
 
based
 
on
 
the
 
most
 
recent
 
(as
 
of
 
the
 
valuation
 
date)
financial
 
projections presented
 
to
 
the
 
Corporation’s Asset
 
/
 
Liability Management
 
Committee (“ALCO”).
 
The
 
growth assumptions
included
 
in
 
these
 
projections
 
are
 
based
 
on
 
management’s
 
expectations for
 
each
 
reporting
 
unit’s
 
financial
 
prospects
 
considering
economic and industry conditions as well
 
as particular plans of each entity
 
(i.e. restructuring plans, de-leveraging, etc.). The cost
 
of
equity used to
 
discount the cash flows
 
was calculated using the
 
Ibbotson Build-Up Method and
 
ranged from
11.99
% to
15.93
% for
the 2024 analysis. The Ibbotson Build-Up Method
 
builds up a cost of equity
 
starting with the rate of
 
return of a “risk-free” asset (20-
year U.S. Treasury
 
note) and adds
 
to it additional
 
risk elements such as
 
equity risk premium, size
 
premium, industry risk
 
premium,
and a
 
specific geographic risk
 
premium (as applicable).
 
The resulting discount
 
rates were
 
analyzed in terms
 
of reasonability given
the current market conditions.