|
Acquisitions (Tables)
|
12 Months Ended |
|
Dec. 31, 2012
|
|
Fairfax, LLC [Member]
|
|
| Summary of Purchase Price Allocation |
The Company
allocated the purchase price as follows (dollars in
thousands):
|
|
|
|
|
|
Restricted cash
|
|
$ |
100 |
|
|
Other assets
|
|
|
220 |
|
|
|
|
|
|
|
Accounts payable
|
|
|
(23 |
) |
|
|
|
|
|
|
Purchase price
|
|
$ |
297 |
|
|
|
|
|
|
|
|
PrinceRidge [Member]
|
|
| Summary of Assets Acquired and Liabilities Assumed |
The following
table summarizes the amounts of identified assets acquired and
liabilities assumed at the acquisition date of May 31,
2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Estimated
Fair Value as of
Acquisition Date
(provisional) (1) |
|
|
Measurement Period
Adjustments |
|
|
Total Estimated
Fair Value as of
Acquisition Date (final) |
|
| |
|
(dollars in
thousands) |
|
|
Assets
acquired:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ |
2,149 |
|
|
$ |
— |
|
|
$ |
2,149 |
|
|
Receivables from brokers,
dealers, and clearing agencies
|
|
|
9,382 |
|
|
|
— |
|
|
|
9,382 |
|
|
Other
receivables
|
|
|
1,815 |
|
|
|
— |
|
|
|
1,815 |
|
|
Investments-trading
|
|
|
42,407 |
|
|
|
— |
|
|
|
42,407 |
|
|
Receivables under resale
agreements
|
|
|
158,688 |
|
|
|
— |
|
|
|
158,688 |
|
|
Other assets
|
|
|
4,730 |
|
|
|
— |
|
|
|
4,730 |
|
|
Liabilities
assumed:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
compensation
|
|
|
(1,725 |
) |
|
|
— |
|
|
|
(1,725 |
) |
|
Accounts payable and other
liabilities
|
|
|
(2,877 |
) |
|
|
— |
|
|
|
(2,877 |
) |
|
Trading securities sold,
not yet purchased
|
|
|
(38,605 |
) |
|
|
— |
|
|
|
(38,605 |
) |
|
Securities sold under
agreement to repurchase
|
|
|
(158,620 |
) |
|
|
— |
|
|
|
(158,620 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
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|
Fair value of existing
PrinceRidge net assets
|
|
|
17,344 |
|
|
|
— |
|
|
|
17,344 |
|
|
Purchase price (2)
(4)
|
|
$ |
18,502 |
|
|
$ |
(93 |
) |
|
$ |
18,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess of purchase price
over net fair value
|
|
|
1,158 |
|
|
|
(93 |
) |
|
|
1,065 |
|
|
Less amount allocated to
intangible asset (3)
|
|
|
(166 |
) |
|
|
— |
|
|
|
(166 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
(4) (5)
|
|
$ |
992 |
|
|
$ |
(93 |
) |
|
$ |
899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
As previously reported in
the Company’s 2011 Annual Report on Form 10-K. |
| (2) |
The purchase price
represents the fair value of PrinceRidge retained by the members of
PrinceRidge other than the Operating LLC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Estimated
Fair Value as of
Acquisition Date
(provisional) |
|
|
Measurement
Period
Adjustments |
|
|
Total Estimated
Fair Value as of
Acquisition Date
(final) |
|
| |
|
(dollars in
thousands) |
|
| Summary Purchase
Accounting |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Fair Value
Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Fair Value of IFMI
Contribution
|
|
$ |
45,000 |
|
|
$ |
— |
|
|
$ |
45,000 |
|
|
Net Fair Value of
PrinceRidge immediately prior to IFMI Contribution
|
|
|
17,344 |
|
|
|
— |
|
|
|
17,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Fair Value of
PrinceRidge After IFMI Contribution
|
|
|
62,344 |
|
|
|
— |
|
|
|
62,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Ownership
Percentage (as negotiated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IFMI
|
|
|
70.3 |
% |
|
|
0.02 |
% |
|
|
70.5 |
% |
|
Non-Controlling
Interest
|
|
|
29.7 |
% |
|
|
(0.02 |
)% |
|
|
29.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0 |
% |
|
|
— |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocable Net Fair
Value of PrinceRidge After IFMI Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IFMI
|
|
|
43,842 |
|
|
|
93 |
|
|
|
43,935 |
|
|
Non-Controlling Interest
(purchase price)
|
|
|
18,502 |
|
|
|
(93 |
) |
|
|
18,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
62,344 |
|
|
$ |
— |
|
|
$ |
62,344 |
|
|
|
|
|
|
|
|
|
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|
See note 18 for
a description of the redeemable non-controlling interest. The
excess of the purchase price over the net fair value of PrinceRidge
immediately prior to the IFMI contribution equals $1,065 calculated
as the purchase price of $18,409 minus the fair value of
PrinceRidge prior to IFMI’s contribution of $17,344. The
excess of $1,065 can also be calculated as IFMI’s
contribution of $45,000 minus IFMI’s allocable fair value of
PrinceRidge subsequent to IFMI’s contribution of
$43,935.
| (3) |
The intangible asset of
$166 represented the estimated value of the broker-dealer license,
which was allocated to the Capital Markets business
segment. |
| (4) |
Goodwill recognized as of
the acquisition date was allocated to the Capital Markets business
segment. The December 31, 2011 balance of goodwill related to
the acquisition of PrinceRidge was not retrospectively adjusted for
the measurement period adjustment since the Company believed this
adjustment was not material. As of December 31, 2012 and 2011,
the goodwill related to the acquisition of PrinceRidge reported on
its consolidated balance sheets was $899 and $992, respectively.
See note 12. |
|
| Summary of Pro Forma Consolidated Information |
The following
unaudited pro forma summary presents consolidated information of
the Company as if the acquisition had occurred on January 1,
2010:
|
|
|
|
|
|
|
|
|
| |
|
Pro forma Year ended December 31, |
|
| |
|
2011 |
|
|
2010 |
|
| |
|
(dollars in
thousands) |
|
|
Revenue
|
|
$ |
114,007 |
|
|
$ |
150,294 |
|
|
Earnings (loss)
attributable to IFMI
|
|
$ |
(10,527 |
) |
|
$ |
5,097 |
|
|
|
JVB Holdings [Member]
|
|
| Summary of Purchase Price Allocation |
The following
table summarizes the calculation of the fair value of consideration
transferred by the Company to acquire JVB Holdings (dollars in
thousands except share and per share data):
|
|
|
|
|
|
|
|
|
|
Equity
consideration:
|
|
|
|
|
|
|
|
|
|
Shares of IFMI issued
(1)
|
|
|
313,051 |
|
|
|
|
|
|
Multiplied by
(2)
|
|
$ |
4.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of stock
consideration
|
|
$ |
1,531 |
|
|
$ |
1,531 |
|
|
Cash consideration
(3)
|
|
|
|
|
|
|
14,956 |
|
|
Contingent payments due
(4)
|
|
|
|
|
|
|
326 |
|
|
|
|
|
|
|
|
|
|
|
Total purchase
price
|
|
|
|
|
|
$ |
16,813 |
|
|
|
|
|
|
|
|
|
|
| (1) |
Excluded 559,020 units of
the Operating LLC issued to certain JVB Holdings Sellers that
remained employees of JVB Holdings. These units vest over a three
year period and are treated as compensation for future service and
not part of the purchase price. See notes 19 and 20. |
| (2) |
Represented the closing
price of IFMI shares on January 13, 2011. |
| (3) |
When closing the
transaction, payment was made based on an estimate of JVB
Holdings’ tangible net worth. However, a mechanism existed in
the contract whereby the Company would owe additional funds or
could recapture funds to the extent JVB Holdings’ tangible
net worth differed from the amount estimated. The amount of cash
consideration represented actual cash paid at closing of $15,044
less $88 receivable from escrowed proceeds for the tangible net
worth adjustment. Also, cash consideration excluded $2,482 to be
paid over time to the Management Employees. The amount is
contingent upon the individuals remaining employees. It is earned
ratably over a three-year period. If the employee terminates
employment during the three year period, any unearned portion is
refundable to the Company. It is treated as compensation for future
services and not part of the purchase price. |
| (4) |
Represents contingent
payments due to the Sellers based on performance targets. A
specific business unit of JVB Holdings was required to earn a
minimum amount of revenue within 12 months of the business
combination in order for this amount to be due to the owners of JVB
Holdings. If that threshold was met, the owners of JVB Holdings
would receive an additional payment of $384 which the Company would
have treated as contingent consideration. Accordingly, the Company
determined the fair value of this arrangement and recorded a
liability equal to the fair value as of the date of the business
combination. The Company had determined that the fair value of this
obligation at the business combination date was $326. The Company
carried this liability at fair value and any future adjustments in
fair value were recognized in earnings. As of December 31,
2011, the Company carried this liability at $0 on the
Company’s consolidated balance sheets and recognized income
of $326 for the year ended December 31, 2011 which was
included in principal transactions and other income in the
Company’s consolidated income statement. |
|
| Summary of Assets Acquired and Liabilities Assumed |
The following
table summarizes the amounts of identified assets acquired and
liabilities assumed at the acquisition date as of January 1,
2011 (dollars in thousands):
|
|
|
|
|
| |
|
Total Estimated
Fair Value as of
Acquisition Date |
|
|
Assets
acquired:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ |
91 |
|
|
Receivables from brokers,
dealers and clearing agencies (deposits with clearing
organizations)
|
|
|
100 |
|
|
Investments-trading
|
|
|
31,935 |
|
|
Other assets (1)
(2)
|
|
|
1,077 |
|
|
Liabilities
assumed:
|
|
|
|
|
|
Payables to brokers,
dealers, and clearing agencies
|
|
|
(17,655 |
) |
|
Accounts payable and other
liabilities
|
|
|
(1,221 |
) |
|
Trading securities sold,
not yet purchased
|
|
|
(4,497 |
) |
|
|
|
|
|
|
Fair value of net assets
acquired
|
|
|
9,830 |
|
|
Purchase price for net
assets acquired
|
|
$ |
16,813 |
|
|
|
|
|
|
|
Goodwill (2) (3)
|
|
$ |
6,983 |
|
|
|
|
|
|
| (1) |
Other assets are comprised
of a purchase accounting adjustment of $166, which represents the
estimated value of the broker-dealer license. The intangible asset
of $166 related to the broker-dealer license was allocated to the
Capital Markets business segment. |
| (2) |
During the measurement
period, which ended on January 13, 2012, an adjustment of $30
reducing the fair value of the assets acquired was made with a
corresponding adjustment to increase goodwill by $30. |
| (3) |
Goodwill recognized as of
the acquisition date was allocated to the Capital Markets business
segment. |
|