Acquisitions |
12 Months Ended |
|---|---|
Dec. 31, 2019 | |
| Business Combinations [Abstract] | |
| Acquisitions |
Acquisitions
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. At December 31, 2019, the fair value of contingent consideration was $606.
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. At December 31, 2019, the fair value of contingent consideration was $30.
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. At December 31, 2019, the fair value of contingent consideration was $694.
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 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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