Marcus & Millichap, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Acquisitions, Goodwill and Other Intangible Assets

Acquisitions, Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2021

Acquisitions, Goodwill and Other Intangible Assets

5.	Acquisitions, Goodwill and Other Intangible Assets

During the nine months ended September 30, 2021, the Company recognized measurement period adjustments, including additional cash expected to be received in excess of the provisional amounts that were recognized at the acquisition date for businesses acquired during 2020. Measurement period adjustments 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 changes in estimates 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):


	September 30, 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	$	34,071	$	—		$	34,071	$	33,375	$	—		$	33,375
Intangible assets (1)		23,974		(9,071	)		14,903		24,745		(6,067	)		18,678

	$	58,045	$	(9,071	)	$	48,974	$	58,120	$	(6,067	)	$	52,053

(1)	Total weighted average amortization period was 5.53 years and 5.57 years as of September 30, 2021 and December 31, 2020, respectively.

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


	Nine Months Ended September 30,
	2021		2020

Beginning balance	$	33,375	$	15,072
Additions from acquisitions (1)		696		9,247
Impairment losses		—		—

Ending balance	$	34,071	$	24,319

(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):


	September 30, 2021


Remainder of 2021	$	869
2022		3,474
2023		3,407
2024		2,891
2025		2,671
Thereafter		1,591

	$	14,903

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 September 30, 2021, the Company considered the impact of

COVID-19

pandemic and evaluated its goodwill and intangible assets for impairment testing. 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 conclud

d that as of September 30, 2021, there was no impairment of its goodwill and intangible assets.