Acquisitions

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Westchester Capital Management

On October 1, 2021, the Company completed the acquisition of Westchester Capital Management, LLC ("Westchester"), which was accounted for in accordance with ASC 805, Business Combinations ("ASC 805"). The total purchase price of $169.3 million was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition. Goodwill of $23.0 million and intangible assets of $144.4 million were recorded as a result of the acquisition. The Company expects $155.6 million of the purchase price to be tax deductible over 15 years. The revenues and operating income of Westchester were not material to the Company's results of operations for the year ended December 31, 2021.

Transaction consideration consisted of $136.8 million in cash paid at closing and $32.5 million in contingent consideration, which represents future potential earn-out payments based on pre-established performance metrics related to retention and revenue growth rates. An initial contingent consideration payment of $20.0 million was earned and paid in December 2021 and future payments will be made, if earned, in 2025 and 2026. The remaining contingent consideration of $12.5 million at December 31, 2021 has been accounted for as a liability within contingent consideration on the Company's Consolidated Balance Sheet.

The following table summarizes the identified acquired assets and liabilities assumed as of the Westchester acquisition date:


	October 1, 2021
	(in thousands)
Assets:
Cash and cash equivalents	$	1,197



Intangible assets	144,400
Goodwill	23,040
Other assets	4,997
Total Assets	173,634
Liabilities

Accounts payable and accrued liabilities	4,300
Total liabilities	4,300
Total Net Assets Acquired	$	169,334

Identifiable Intangible Assets Acquired

In connection with the allocation of the Westchester purchase price, the Company identified the following intangible assets:


	October 1, 2021
	Approximate Fair Value (in thousands)		Weighted Average of Useful Life (in years)
Definite-lived intangible assets:
Investment management agreements	$	138,000	10
Trade names	6,400		10
Total definite-lived intangible assets	$	144,400

The fair value of investment management agreements was estimated using a discounted cash flow method and the fair value of the trade names was estimated using a royalty savings method which were prepared with the assistance of an independent valuation firm and approved by management.

AllianzGI Strategic Partnership

On February 1, 2021, the Company finalized a strategic partnership with Allianz Global Investors U.S. LLC ("AllianzGI"), pursuant to which the Company became the investment adviser, distributor and/or administrator of certain of AllianzGI's open-end, closed-end and retail separate account assets. This transaction was classified as an asset acquisition and the cost of the acquisition was allocated to the assets acquired on the basis of their relative fair values. Additionally, as part of the strategic partnership, AllianzGI’s Dallas-based Value Equity team joined the Company as a newly established affiliated manager, NFJ Investment Group ("NFJ"). The addition of NFJ was classified as a business combination under ASC 805 and assets acquired were recorded at fair value. Assets acquired primarily consisted of definite-lived intangible assets representing open-end, closed-end and retail separate account investment contracts as well as indefinite-lived assets consisting of goodwill related to NFJ. The revenues and operating income of NFJ were not material to the Company's results of operations for the year ended December 31, 2021.

Transaction consideration consists of variable cash payments based on a percentage of the investment management fees earned on certain open-end, closed-end and retail separate account assets from the transaction. Payments are to be made annually on the anniversary of the closing date of the transactions over the next seven years. The initial estimated value of these future revenue participation payments was $137.7 million upon closing. These future payments have been recorded as a liability and included as Contingent Consideration on the Company's Consolidated Balance Sheet. In addition, the Company capitalized $7.7 million of costs associated with certain assets acquired. Contingent payment obligations related to the NFJ acquisition which is accounted for in accordance with ASC 805 was remeasured at fair value as of December 31, 2021, with the change in fair value recorded within the consolidated statement of operations. The estimated value of future revenue participation payments at December 31, 2021 was $150.1 million.

The following table summarizes the identified acquired assets:


	February 1, 2021
	Approximate Fair Value (in thousands)		Weighted Average Useful Life (in years)
Definite-lived intangible assets:
Open-end and closed-end fund investment contracts	$	101,447	13
Retail separate account investment contracts	17,000		6
Trade name	1,941		8
Total definite-lived intangible assets	120,388
Goodwill	25,000
Total assets acquired	$	145,388

The fair value of the investment management agreements was estimated using a discounted cash flow method and the fair value of the trade names was estimated using a royalty savings method which were prepared with the assistance of an

independent valuation firm and approved by management.