Acquisitions |
9 Months Ended |
|---|---|
Sep. 30, 2018 | |
| Business Combinations [Abstract] | |
| Acquisitions |
Acquisitions
In August 2018, LTAIS purchased certain assets of the insurance distribution business operated by Kestler Financial Group, Inc. (“KFG”), an independent insurance and annuity distribution company, located in Leesburg, Virginia. This asset purchase was deemed to be an asset acquisition. Under the terms of an asset purchase agreement, LTAIS purchased certain KFG assets, including the rights to the "Kestler Financial Group" name and brand. In October 2018, Securities America purchased certain assets of the brokerage business operated by KFG.
The consideration for the KFG insurance distribution transaction was $7,917, consisting of cash of $1,683 paid at closing, a $165 cash payment to be made on the first anniversary of the closing date, a promissory note in the original principal amount of $5,450 and contingent consideration having a fair value of $619, for which a liability was recognized based on estimated acquisition-date fair value of the potential earn-out.
The consideration for the KFG brokerage business transaction, which closed in October, was $1,335, consisting of cash of $537 paid at closing (including $271 of reimbursable expenses), a $266 cash payment to be made on each anniversary of the closing date for the next three years and contingent consideration having a fair value of $0.
The liability was valued using an income-based approach of the earn-out’s probability-weighted expected payout using three earn-out scenarios. The measurement of the earn-out, which relates to a five year period, is based on unobservable inputs (Level 3) and reflects the Company’s own assumptions. The purchase price for the KFG insurance distribution transaction was allocated (preliminary) $6,161 to identifiable intangibles and other assets and $1,756 to goodwill.
Results of operations relating to KFG, which are included in the accompanying consolidated statements of operations from their respective date of acquisition, were not material. In addition, based on materiality, pro forma results were not presented.
In October 2018, Highland purchased certain assets of Four Seasons Financial Group, Inc. (“FSFG”), a wholesale insurance distribution business located in Marlton, New Jersey. The consideration for the FSFG transaction was $1,722, consisting of cash of $450 paid upon closing, a $450 cash payment to be made on each anniversary of the closing date for the next two years and promissory notes in the original principal amount of $372. In addition, Highland may be required to deliver, during the five years following the closing date, an annual payment to FSFG based on the adjusted net revenue of the business acquired by Highland.
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