Intangible Assets, Net and Goodwill

9 Months Ended

Aug. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

A summary of Intangible assets, net and goodwill is as follows (in thousands):


	August 31, 2020		November 30, 2019
Indefinite-lived intangibles:
Exchange and clearing organization membership interests and registrations	$	7,874	$	8,273

Amortizable intangibles:
Customer and other relationships, net of accumulated amortization of $117,609 and $111,060	53,396		59,575
Trademarks and tradenames, net of accumulated amortization of $27,673 and $24,800	101,207		103,790

Other, net of accumulated amortization of $8,042 and $5,366	8,640		11,316
Total intangible assets, net	171,117		182,954

Goodwill:
Investment Banking and Capital Markets (1) (2)	1,560,255		1,556,810
Asset Management (1)	143,000		143,000
Real estate	36,711		36,711
Other operations	3,459		3,459
Total goodwill	1,743,425		1,739,980

Total intangible assets, net and goodwill	$	1,914,542	$	1,922,934

(1) As discussed further in Note 23, during the first quarter of 2020, we changed our internal structure with regard to our operating segments. As a result, we created a separate operating segment that consists of the asset management activity previously included within our Investment Banking, Capital Markets and Asset Management segment. In order to reallocate goodwill that was previously contained in our Investment Banking, Capital Markets and Asset Management segment to the newly created Investment Banking and Capital Markets segment and the Asset Management segment, we performed a fair value analysis of the components.

Estimated fair values were determined based on valuation techniques that we believe market participants would use and included price-to-earnings, price-to-book multiples and discounted cash flow techniques. Based on the relative fair values of each of the components, $143.0 million of the total $1,699.8 million goodwill within the historical Investment Banking, Capital Markets and Asset Management segment was allocated to the new Asset Management segment. In order to compare results with prior periods, we have recast November 30, 2019 goodwill in the same manner. We performed an impairment test immediately before and after the reallocation of goodwill between the new segments and the results of the impairment test did not indicate any goodwill impairment.

(2) The increase in Investment Banking and Capital Markets goodwill during the nine months ended August 31, 2020, primarily relates to translation adjustments.

Amortization expense on intangible assets was $3.7 million and $4.0 million for the three months ended August 31, 2020 and 2019, respectively, and $11.5 million and $10.6 million for the nine months ended August 31, 2020 and 2019, respectively.

The estimated aggregate future amortization expense for the intangible assets for each of the next five years is as follows (in thousands):


Remainder of current year	$	3,673
2021	14,457
2022	11,180
2023	9,945
2024	9,189

We performed our annual impairment testing of goodwill within the Investment Banking and Capital Markets, and Asset Management segments as of August 1, 2020. The quantitative goodwill impairment test is performed at our reporting unit level and consists of two steps. In the first step, the fair value of the reporting unit is compared with its carrying value, including goodwill and allocated intangible assets. If the fair value is in excess of the carrying value, the goodwill for the reporting unit is considered not to be impaired. If the fair value is less than the carrying value, then a second step is performed in order to measure the amount of the impairment loss, if any, which is based on comparing the implied fair value of the reporting unit’s goodwill to the carrying value of the reporting unit’s goodwill.

The estimated fair value of both the Investment Banking and Capital Markets segment and the Asset Management segment are based on valuation techniques that we believe market participants would use, although the valuation process requires significant judgment and often involves the use of significant estimates and assumptions. The methodologies we utilize in estimating fair value include price-to-earnings and price-to-book multiples of comparable public companies and/or projected cash flows. In addition, as the fair values determined under the market approach represent a noncontrolling interest, we applied a control premium to arrive at the estimated fair value of our reporting units on a controlling basis. An independent valuation specialist was engaged to assist with the valuation process at August 1, 2020. The results of our annual goodwill impairment test for both the Investment Banking and Capital Markets segment and the Asset Management segment did not indicate any goodwill impairment.

We performed our annual impairment testing of intangible assets with an indefinite useful life, which consists of exchange and clearing organization membership interests and registrations within our Investment Banking and Capital Markets segment, at August 1, 2020. We also deemed it appropriate to consider the impact of the global novel coronavirus pandemic as a triggering event and performed an interim impairment test for our indefinite-lived intangible assets at May 31, 2020. At May 31, 2020 and August 1, 2020, we elected to perform a quantitative assessment of membership interests and registrations that have available quoted sales prices as well as certain other membership interests and registrations that have declined in utilization. Qualitative assessments were performed on the remainder of our indefinite-life intangible assets. In applying our quantitative assessment at both May 31, 2020 and August 1, 2020, we recognized immaterial impairment losses on certain exchange membership interests and registrations. With regard to our qualitative assessment of the remaining indefinite-life intangible assets, based on our assessment of market conditions, the utilization of the assets and the replacement costs associated with the assets, we concluded that it is not more likely than not that the intangible assets are impaired.