Business Acquisitions

12 Months Ended

Nov. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Business Acquisitions

Note 4. Business Acquisitions

We acquired Stratos and OpNet during the fourth quarter of 2023.

Stratos is a global provider of online foreign exchange services.

OpNet is a fixed wireless broadband service provider in Italy and

also owns a majority of the common shares of Tessellis S.p.A.

(“Tessellis”), a telecommunications company publicly listed on

the Italian stock exchange. These companies were investments

in our legacy merchant banking portfolio, and these transactions

have been accounted for under the acquisition method of

accounting which requires that the assets acquired, including

identifiable intangible assets, and liabilities assumed to be

recognized at their respective fair values as of the acquisition

date.

Fair value of assets acquired and liabilities assumed on the

acquisition dates:

$ in thousands	Stratos	OpNet	Total
Cash and cash equivalents ......................	$83,006	$7,875	$90,881
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations .....................	124,306	—	124,306
Financial instruments owned, at fair value .......................................................	53,028	—	53,028
Investments in and loans to related parties ....................................................	—	6,644	6,644
Receivables:
Brokers, dealers and clearing organizations ..........................................	113,750	—	113,750
Fees, interest and other .........................	4,745	14,728	19,473
Property and equipment, net ....................	31,830	111,458	143,288
Goodwill (1) ................................................	5,463	127,051	132,514
Assets held for sale (2) .............................	—	578,820	578,820
Other assets (3) .........................................	31,135	98,278	129,413
Total assets acquired ...............................	$447,263	$944,854	$1,392,117
Financial instruments sold, net yet purchased, at fair value .......................	$31,293	$—	$31,293
Payables:
Brokers, dealers and clearing organizations ........................................	236	—	236
Customers payables .................................	297,494	—	297,494
Short-term borrowings ..............................	—	7,137	7,137
Lease liabilities ...........................................	9,308	23,040	32,348
Liabilities held for sale (2) ........................	—	303,447	303,447
Accrued expenses and other liabilities ...	18,011	176,308	194,319
Long-term debt ...........................................	—	75,437	75,437
Total liabilities assumed ..........................	$356,342	$585,369	$941,711
Net assets acquired ..................................	$90,921	$359,485	$450,406
Noncontrolling interests ..........................	$—	$42,168	$42,168

(1)All goodwill is attributed to the Asset Management reportable segment.

(2)Relates to the net operating assets of the wholesale operations of OpNet.

(3)Includes intangible assets in the form of purchased technology, trademarks

and trade names, and customer relationships related to Tessellis that was

acquired as part of obtaining control of OpNet. These intangible assets are

being amortized over a finite life of up to 20 years.

Stratos

We historically held a 49.9% voting interest in Stratos. In March

2023, certain noteholders of Global Brokerage Inc. (“GLBR”) filed

an involuntary bankruptcy petition against GLBR and its

subsidiary, Global Brokerage Holdings LLC (“Holdings”), which

holds a 50.1% voting equity interest in Stratos. On September 14,

2023, we completed a foreclosure on the collateral that GLBR had

pledged to secure its obligations under a credit facility, which

consisted of GLBR’s equity interest in Stratos. As a result of the

foreclosure, we own 100% of the outstanding interests of Stratos;

and Stratos has become a consolidated subsidiary.

In connection with the acquisition of the additional 50.1%

interests in Stratos, we extinguished our senior secured term loan

to Stratos of $39.2 million and recognized a gain of $5.6 million,

which is reflected in Principal transactions revenues. Upon the

acquisition, we remeasured our previously existing 49.9% interest

at fair value and recognized a loss of $4.7 million, in Other

revenues, representing the excess of the carrying value of the

49.9% interest of our $47.9 million equity method investment

over its fair value at the date of acquisition. The fair value of the

previously existing equity interest was measured using an

income approach based on estimates of future expected cash

flows applying a risk-adjusted discount rate of 24.5%. Critical

estimates to derive future expected cash flows includes the use

of projected revenues and expenses, applicable tax rates and

depreciation factors with the risk-adjusted discount rate based

upon an estimated weighted average cost of capital for the

acquired business.

No consideration, other than the nonmonetary exchange of our

senior secured term loan, was transferred in connection with the

foreclosure, which resulted in us obtaining 100% ownership of

the outstanding interests of Stratos. In applying acquisition

accounting, we estimated the overall enterprise fair value of

Stratos consistent with the methodology utilized to fair value our

previously existing 49.9% equity interest. The enterprise fair value

was allocated based on the fair values of the acquired assets and

assumed liabilities resulting in a gain of $0.9 million and goodwill

of $5.5 million.

The results of Stratos’ operations have been included in our

Consolidated Statements of Earnings from the date of

acquisition on September 14, 2023.

OpNet

We historically owned 47.4% of the common shares and 50.0% of

the voting rights of OpNet and various classes of convertible

preferred stock issued by OpNet (the “preferred shares”). On

November 30, 2023, we provided notice of our intent to convert

certain classes of our preferred shares into common shares and,

as a result, we obtained control of OpNet. Upon conversion on

May 7, 2024, our ownership increased to 57.5% of the common

shares and our voting rights increased to 72.5% of the aggregate

voting rights of OpNet. Additionally, during the first quarter of

2024, we exchanged €115.1 million of our shareholder loans for

additional preferred shares and also subscribed to additional

preferred shares of €25.0 million at a price per share of €10.00.

During the second quarter of 2024, we provided an additional

shareholder loan of €20.0 million and subscribed to additional

preferred shares of €18.7 million at a price per share of €10.00. In

June 2024, we provided an additional shareholder loan of

€20.0 million.

Upon obtaining control of OpNet on November 30, 2023 the

assets and liabilities of OpNet are included in our consolidated

financial statements. Additionally, OpNet was considered to be a

variable interest entity and we determined that we were the

primary beneficiary of OpNet. The initial consolidation of OpNet

was accounted for under the acquisition method of accounting

and we remeasured our previously existing interests at fair value

and recognized a gain of $115.8 million, representing the excess

of the fair value of our previously existing interests over the

carrying value of our investment of $201.6 million. The fair value

of the previously existing interests was measured based on an

estimate of what could be recognized in a sale transaction for

certain net operating assets of OpNet, which have been classified

as held for sale, and OpNet’s percentage ownership of Tessellis

common shares based on the publicly listed exchange price of

Tessellis on November 30, 2023. No consideration was

transferred in connection with the consolidation.

The remaining identifiable assets and assumed liabilities of

OpNet primarily represent the assets and liabilities of Tessellis.

An enterprise value for Tessellis was estimated based on its

market capitalization at November 30, 2023, which was then

allocated to the identifiable assets, including intangible assets,

liabilities, and noncontrolling interests of Tessellis using an

income approach, which calculates the present value of the

estimated economic benefit of future cash flows, in order to

determine the fair value of the identified customer relationships

and Tessellis trade name. Property and equipment and developed

technology assets were valued using a replacement cost

methodology. Critical estimates included future expected cash

flows, including forecasted revenues and expenses, and

applicable discount rates. Discount rates used to compute the

present value of expected net cash flows were based upon

estimated weighted average cost of capital. The initial allocation

of the purchase price resulted in the recognition of goodwill

relating to Tessellis of $127.1 million.

The initial estimated purchase price allocation as of November

30, 2023 for OpNet was revised during the first quarter of 2024 as

new information was received and analyzed resulting in an

increase in intangible assets of $39.3 million, a decrease in

property and equipment of $12.3 million, and a decrease in

goodwill of $27.0 million.

In February 2024, OpNet agreed to sell substantially all of its

wholesale operating assets to Wind Tre S.p.A., a subsidiary of CK

Hutchison Group Telecom Holdings Ltd. The sale closed in

August 2024 and we received net cash proceeds of

$322.8 million and recognized a pre-tax gain on sale of

$3.5 million. The sale of OpNet did not include our interest in

Tessellis.

During 2024, Tessellis executed various acquisitions and, as a

result, recognized assets and liabilities of $24.5 million and

$18.8 million, respectively, on the acquisition dates. Total assets

primarily relate to goodwill, property and equipment, intangible

assets, and short-term trade receivables. Total liabilities primarily

relate to financial debt assumed and trade payables. The primary

acquisition executed during 2024 was the acquisition of a 97.2%

ownership interest in Go Internet S.p.A. (“Go Internet”) for a total

consideration of €4.1 million. We are in the process of finalizing

purchase price allocation adjustments related to the identified

assets and may adjust these amounts upon completion of our

assessment in subsequent reporting periods.