Acquisitions |
12 Months Ended |
|---|---|
Dec. 31, 2018 | |
| Business Combinations [Abstract] | |
| Acquisitions |
Acquisitions
Wall Street Financial Group
In September 2016, Securities America Financial Corporation ("SAFC"), which is the parent of Securities America, purchased certain assets of Wall Street Financial Group, Inc. ("Wall Street"), which was deemed to be a business acquisition. Relationships with certain registered representatives and investment advisor representatives including their client accounts were acquired. The consideration for the transaction was $3,468, consisting of cash of $1,192 and contingent consideration having a fair value of $2,276, for which a liability was recognized based on the estimated acquisition-date fair value of the potential earn-out.
The liability was valued using a Monte Carlo simulation based option pricing model. The fair value measurement of the earn-out, which relates to the three-year period following closing, is based on unobservable inputs (Level 3) and reflects the Company’s own assumptions. The purchase price was allocated as follows: $3,070 to identifiable intangibles and $398 to goodwill.
Foothill Securities, Inc.
In December 2016, SAFC purchased certain assets of Foothill Securities, Inc. ("Foothill"), which was deemed to be a business acquisition. Relationships with certain registered representatives and investment advisor representatives including their client accounts were acquired. The consideration for the transaction was $5,571, consisting of cash of $2,905 and contingent consideration having a fair value of $2,666, for which a liability was recognized based on the estimated acquisition-date fair value of the potential earn-out.
The liability was valued using a Monte Carlo simulation based option pricing model. The fair value measurement of the earn-out, which relates to the three-year period following closing, is based on unobservable inputs (Level 3) and reflects the Company’s own assumptions. The purchase price was allocated as follows: $4,640 to identifiable intangibles and $931 to goodwill.
Kestler Financial Group, Inc.
In August 2018, an affiliate of Highland 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, an affiliate of Highland 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 $7,926, 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, 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 and additional liabilities of $9.
The consideration for the KFG brokerage business transaction, which closed in October 2018, was $1,167, 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 having a fair value of $630 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 transaction was allocated $7,083 to identifiable intangibles and other assets and $2,010 to goodwill.
Four Seasons Financial Group, Inc.
In November 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 $2,345, consisting of cash of $450 paid at closing, a $450 cash payment to be made on each anniversary of the closing date for the two years after closing, promissory notes in the original principal amount of $372 and contingent consideration having a fair value of $622.
The liability was valued using an income-based approach of the earn-out’s probability-weighted expected payout using four 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 FSFG transaction was allocated (preliminary) $1,945 to identifiable intangibles and other assets and $400 to goodwill.
Results of operations relating to KFG, FSFG, Wall Street and Foothill which are included in the accompanying consolidated statements of operations from their respective date of acquisition, were not material. Also, based on materiality, pro-forma results were not presented.
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