Marcus & Millichap, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Acquisitions, Goodwill and Other Intangible Assets

Acquisitions, Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2019

Acquisitions, Goodwill and Other Intangible Assets

6.	Acquisitions, Goodwill and Other Intangible Assets

During 2019, the Company expanded its network of its real estate sales professionals and provided further diversification to its real estate brokerage services.

In the fourth quarter, the Company completed an acquisition of one business that was accounted for as a business combination and the results have been included in the consolidated financial statements beginning on the acquisition date. The acquisition included aggregate consideration of $8.5 million and included: (i) cash paid at closing and (ii) the fair value of contingent consideration and deferred payments using a probability-weighted, discounted cash flow estimate on achieving certain financial metrics or service and time requirements. Contingent consideration and deferred payments are included in accounts payable and other liabilities and deferred rent and other liabilities in the consolidated balance sheets. See Note 10 – “Fair Value Measurements” for additional information on contingent consideration.

The goodwill recorded as part of the acquisition primarily arose from the acquired assembled workforce and commercial

sales platforms.

The Company expects all of the goodwill to be tax deductible, with the

tax-deductible

amount of goodwill related to the contingent consideration to be determined once the cash payments are made to settle the contingent consideration. The goodwill resulting from the acquisition is allocated to the Company’s one reporting unit.

Goodwill and intangible assets, net consisted of the following (in thousands):


	December 31, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Goodwill and intangible assets:
Goodwill (1)	$	15,072	$	—		$	15,072	$	11,459	$	—		$	11,459
Intangible assets (1)(2)		9,050		(1,810	)		7,240		4,240		(314	)		3,926

	$	24,122	$	(1,810	)	$	22,312	$	15,699	$	(314	)	$	15,385

(1)	Represents additions from acquisitions.

(2)	Total weighted average amortization period was 4.37 years and 5.14 years as of December 31, 2019 and 2018, respectively.

The changes in the carrying amount of goodwill consisted of the following (in thousands):


	Years Ended December 31,
	2019		2018
Beginning balance	$	11,459	$	—
Additions from acquisitions		3,613		11,459
Impairment losses		—		—

Ending balance	$	15,072	$	11,459

Estimated amortization expense for intangible assets for the next five years and thereafter consisted of the following (in thousands):


	Year Ended December 31,
2020	$	2,493
2021		1,623
2022		1,245
2023		1,242
2024		637

	$	7,240