Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill

In accordance with US GAAP, the Company tests goodwill for impairment on an annual basis or at an interim period if events or changed circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount. Under US GAAP, the Company first assesses the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amounts as a basis for determining if it is necessary to perform the two-step approach. Periodically estimating the fair value of a reporting unit requires significant judgment and often involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant effect on whether or not an impairment charge is recorded and the magnitude of such a charge.

The Company estimated the fair value using the income and market approach which involves estimates of future cash flows, discount rates, economic forecast and other assumption which are then used in the market approach (earning and / or transactions multiples) and / or income approach (discounted cash flow method).

Based on the results of the impairment analysis as of December 31, 2014 the Company did not recognize any impairment relating to the alternative investment reporting unit. However, the Company recognized an impairment charge of $2.3 million for its broker dealer reporting unit. The impairment charge is due to the securities lending business which the Company decided to wind down during the fourth quarter of 2014. The Company determined that the securities lending business represented a standalone business. After winding it down, the reporting unit will not be able to realize the benefits of the acquired goodwill. Therefore, the Company recognized an impairment charge for the goodwill associated with the securities lending business.

As a result of the Company's acquisition of Dahlman, during the first quarter of 2013, the Company recognized goodwill in the amount of $8.7 million within the broker dealer reporting unit (See Note 2).

No impairment charges for goodwill were recognized during the years ended December 31, 2013, and 2012, respectively.

For the year ended December, 31, 2014 the Company elected to bypass Step 0 and perform Step 1 of the goodwill impairment analysis, which includes determining whether the carrying amount of a reporting unit, including goodwill, exceeds its estimated fair value.

The following table presents the changes in the Company's goodwill balance, by reporting unit for the years ended December 31, 2014, 2013, and 2012:



	Alternative Investment			Broker- Dealer			Total
	(dollars in thousands)
Beginning balance - December 31, 2012
Goodwill	$	30,228		$	15,668		$	45,896
Accumulated impairment charges	(10,200		)	(7,151		)	(17,351		)
Net	20,028			8,517			28,545

Activity: 2013
Recognized goodwill	—			8,695			8,695
Goodwill impairment charges	—			—			—

Ending balance: December 31, 2013
Goodwill	30,228			24,363			54,591
Accumulated impairment charges	(10,200		)	(7,151		)	(17,351		)
Net	20,028			17,212			37,240

Activity: 2014
Recognized goodwill	—			—			—
Goodwill impairment charges	—			(2,334		)	(2,334		)

Ending balance: December 31, 2014
Goodwill	30,228			24,363			54,591
Accumulated impairment charges	(10,200		)	(9,485		)	(19,685		)
Net	$	20,028		$	14,878		$	34,906

Intangible assets

Information for the Company's intangible assets that are subject to amortization is presented below as of December 31, 2014 and 2013. The Company recognized trade name, customer relationships, and customer contracts in connection with the transactions in prior years. As a result of the acquisition of Dahlman during the period ended December 31, 2013 (see Note 2) the Company recognized intangible assets in the amount of $2.8 million. These intangibles include trade name and customer relationships with weighted average useful lives of 4.7 years.



		December 31, 2014							December 31, 2013
	Amortization Period	Gross Carrying Amount		Accumulated Amortization			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 names	5 - 7.5	9,612		(8,305		)	1,307		9,612		(7,747		)	1,865
Customer relationships	4 - 10	13,284		(8,936		)	4,348		14,744		(8,375		)	6,369
Customer contracts	1.2	800		(800		)	—		800		(800		)	—
Non compete agreements and covenants with limiting conditions acquired	1 - 10	31		(21		)	10		2,697		(2,583		)	114
Intellectual property	3 - 10	6,437		(3,619		)	2,818		6,951		(3,205		)	3,746
		$	34,064	$	(25,581	)	$	8,483	$	38,704	$	(26,610	)	$	12,094

The Company tests intangible assets for impairment if events or circumstances suggest that the asset groups carrying value may not be fully recoverable. For the year ended December 31, 2013, no impairment charge for intangible assets was recognized.

During the year ended December 31, 2014 the Company wrote off $0.9 million representing the remaining intangible assets related to the securities lending business. These intangibles were assessed for impairment when the Company decided to wind down the business during the fourth quarter of 2014. The Company does not expect to derive future benefits from these intangible assets. The impairment charge is recorded in depreciation and amortization expense within the accompanying consolidated statements of operations for the year ended December 31, 2014.

Amortization expense related to intangible assets was $3.6 million (including impairment charges of $0.9 million) related to the broker-dealer segment), $3.7 million and $2.7 million for the years ended December 31, 2014, 2013 and 2012, 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.

The estimated future amortization expense for the Company's intangible assets as of December 31, 2014 is as follows:



	(dollars in thousands)
2015	$	1,941
2016	1,811
2017	1,411
2018	849
2019	760
Thereafter	1,711
	$	8,483

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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