Quarterly report pursuant to Section 13 or 15(d)

Acquisitions, Goodwill and Other Intangible Assets

v3.21.1
Acquisitions, Goodwill and Other Intangible Assets
3 Months Ended
Mar. 31, 2021
Business Combinations [Abstract]  
Acquisitions, Goodwill and Other Intangible Assets
5.
Acquisitions, Goodwill and Other Intangible Assets
During the three months ended March 31, 2021, the Company recognized measurement period adjustments, including additional cash acquired to the provisional amounts that were recognized at the acquisition date for businesses acquired during 2020 to reflect new information obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have affected the measurement of the amounts recognized as of
the acquisition date. The impact to amortization expense not previously recognized related to these adjustments was not material.
The goodwill recorded as part of the acquisitions primarily arose from the acquired assembled workforce and brokerage and financing sales platforms. The Company expects all of the goodwill to be tax deductible, with the
tax-deductible
amount of goodwill related to the contingent and deferred consideration to be determined once the cash payments are made to settle any contingent and deferred consideration. The goodwill resulting from acquisitions is allocated to the Company’s one reporting unit.
Goodwill and intangible assets, net consisted of the following (in thousands):
 
     March 31, 2021      December 31, 2020  
     Gross
Carrying
Amount
     Accumulated
Amortization
    Net Book
Value
     Gross
Carrying
Amount
     Accumulated
Amortization
    Net Book
Value
 
Goodwill and intangible assets:
                                                   
Goodwill
   $ 34,046      $ —       $ 34,046      $ 33,375      $ —       $ 33,375  
Intangible assets
(1)
     23,975        (7,204     16,771        24,745        (6,067     18,678  
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
     $ 58,021      $ (7,204   $ 50,817      $ 58,120      $ (6,067   $ 52,053  
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
 
 
(1)
Total weighted average amortization period was
 
5.53 years and 5.57 years as of March 31, 2021 and December 31, 2020, respectively.
The changes in the carrying amount of goodwill consisted of the following (in thousands):
 
     Three Months Ended
March 31,
 
     2021      2020  
Beginning balance
   $ 33,375      $ 15,072  
Additions from acquisitions
(1)
     671        3,990  
Impairment losses
     —          —    
    
 
 
    
 
 
 
Ending balance
   $ 34,046      $ 19,062  
    
 
 
    
 
 
 
 
(1)
 
The 2021 addition represents a measurement period adjustment.
Estimated amortization expense for intangible assets by year for the next five years and thereafter consisted of the following (in thousands):
 
    
March 31, 
2021
 
Remainder of 2021
   $ 2,737  
2022
     3,474  
2023
     3,419  
2024
     2,891  
2025
     2,659  
Thereafter
     1,591  
    
 
 
 
     $ 16,771  
    
 
 
 
The Company evaluates goodwill for impairment annually in the fourth quarter. In addition to the annual impairment evaluation, the Company evaluates at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing, which indicate that it is more likely than not an impairment loss has occurred. The Company evaluates its intangible assets that have finite useful lives whenever an event or change in circumstances indicates that the carrying value of the asset may not be recoverable. 
As of March 31, 2021, the Company considered the impact of
COVID-19
pandemic and evaluated its goodwill and intangible assets for impairment testing. The Company considered qualitative and quantitative factors, including the impact from the
COVID-19
induced economic slowdown and current projected recovery timeframes. The Company estimated the recoverability of the intangible assets by comparing the carrying amount of each asset to the future undiscounted cash flows that the Company expects the asset to generate. The sum of the undiscounted expected future cash flows was greater than the carrying amount of the intangible assets. The Company concluded that as of March 31, 2021, there was no impairment of its goodwill and intangible assets.