Goodwill and Intangible Assets

Goodwill

The Company recognized goodwill of $30.2 million as a result of a 2004 business combination within the Alternative Investment Management segment.

As a result of the November 2009 Transactions discussed in Note 2, the Company recognized additional goodwill of $7.2 million during the year ended December 31, 2009. This goodwill is recorded within the broker-dealer segment.

Based on a valuation performed by an independent valuation firm in order to test the goodwill for impairment as of December 31, 2010, it has been determined that no impairment loss would need to be recognized for the year ended December 31, 2010. The testing was performed using market multiples and discounted cash flow analysis.

In addition, the Company changed the reporting units identified for the purposes of performing the goodwill impairment test during the year ended December 31, 2010. Prior to the merger with Cowen Holdings, the 50% ownership held by Unicredito in the Ramius Fund of Funds business warranted that the Fund of Funds business be considered as a separate reporting unit for the purposes of goodwill impairment assessment. As a result of the Transactions discussed in Note 2 and re-purchase of this 50% stake from Unicredito, the Company made a determination to aggregate the Fund of Funds and Asset Management reporting units into one single operating segment, Alternative Investment Management, on the basis that these components have similar economic characteristics. As such, the Company performed assessment of goodwill impairment based on two business segments: Alternative Investment Management and Broker-Dealer. The resulting change did not have any impact on whether or not an impairment charge would have been recorded during 2010.

For the year ending December 31, 2011, the Company engaged an independent valuation specialist to assist with the goodwill impairment analysis. The independent valuation specialist employed industry standard tools and methodology which incorporated both market and income approach. Based on the results of the impairment analysis as of December 31, 2011, it has been determined that no impairment loss would need to be recognized relating to the goodwill recorded within the Alternative Investment Management segment.

However, the Company recognized an impairment charge for the entire amount of goodwill related to the broker-dealer segment amounting to $7.2 million. This was primarily due to the effects of global and macro economic conditions that prevailed throughout the year. Specifically, the adverse investment climate coupled with the European Debt crises, resulted in declining trading volumes and increased volatility. These developments negatively affected the Company's revenues in particular the broker-dealer segment and caused the per share price to decline below a tangible book value.

The following table presents the changes in the Company's goodwill balance, by segment, for the years ended December 31, 2011 and 2010:



	2011									2010
	Alternative Investment Management			Broker- Dealer			Total			Alternative Investment Management			Broker- Dealer		Total
	(dollars in thousands)
Beginning balance:
Goodwill	$	30,228		$	7,151		$	37,379		$	30,228		$	7,151	$	37,379
Accumulated impairment charges	(10,200		)	—			(10,200		)	(10,200		)	—		(10,200		)
Net	20,028			7,151			27,179			20,028			7,151		27,179
Activity:
Goodwill impairment charges	—			(7,151		)	(7,151		)	—			—		—
	—			(7,151		)	(7,151		)	—			—		—
Ending balance:
Goodwill	30,228			7,151			37,379			30,228			7,151		37,379
Accumulated impairment charges	(10,200		)	(7,151		)	(17,351		)	(10,200		)	—		(10,200		)
Net	$	20,028		$	—		$	20,028		$	20,028		$	7,151	$	27,179

Intangible assets

Information for the Company's intangible assets that are subject to amortization is presented below as of December 31, 2011 and 2010. The trade name, customer relationships, and customer contracts were acquired in connection with the Transactions in November 2009. See Note 2 for further discussion.



		December 31, 2011							December 31, 2010
	Amortization Period	Gross Carrying Amount		Accumulated Amortization (1)			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in years)	(in thousands)							(in thousands)
Investment contracts	5	$	3,900	$	(3,900	)	$	—	$	3,900	$	(3,900	)	$	—
Trade name	7.5	9,400		(6,649		)	2,751		9,400		(1,463		)	7,937
Customer relationships	4	6,800		(4,916		)	1,884		6,800		(1,983		)	4,817
Customer contracts	1.2	800		(800		)	—		800		(800		)	—
Covenants to not compete	1 or 2	1,950		(1,950		)	—		—		—			—
Covenants with limiting conditions	10	580		(580		)	—		—		—			—
Intellectual property	3	2,550		(1,425		)	1,125		—		—			—
		$	25,980	$	(20,220	)	$	5,760	$	20,900	$	(8,146	)	$	12,754

(1) Includes impairment charges related to intangible assets during the year ended December 31, 2011.

Intangibles acquired upon acquisition of LaBranche in the second quarter of 2011 (See Note 2) are covenants to not compete, covenants with limiting conditions and intellectual property. These intangibles were assessed for impairment when the Company discontinued the operations of the LaBranche subsidiaries (See Note 4) and an impairment charge of $2.9 million (in addition to the $1.0 million of amortization recorded during the year) was recognized as the Company will no longer derive future benefits from these intangibles. This amount was recorded in net income (loss) from discontinued operations, net of tax in the accompanying consolidated statements of operations for the year ended December 31, 2011.

The Company recorded an impairment charge of $5.2 million related to the trade name and customer relationships acquired during the 2009 Transaction which is attributable to the broker-dealer segment. The impairment charge recognized is primarily attributable to the lower customer trading volumes and is recorded in depreciation and amortization expense within the accompanying consolidated statements of operations for the year ended December 31, 2011. The Company used the discounted cash flow approach to determine the future benefits expected to be derived from the trade name and customer relationships.

Amortization expense related to intangible assets (including impairment charges of $5.2 million relating to the broker-dealer segment) was $8.1 million, $3.6 million and $1.4 million for the years ended December 31, 2011, 2010 and 2009, respectively, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. All of the Company's intangible assets have finite lives. There were no impairment charges related to intangible assets during the years ended 2010 and 2009.

The estimated future amortization expense for the Company's intangible assets as of December 31, 2011 is as follows:




	(dollars in thousands)
2012	$	1,993
2013	1,822
2014	741
2015	516
2016	516
Thereafter	172
	$	5,760