Acquisition

3 Months Ended

Mar. 31, 2021

Acquisition

Malta Holdings

On February 26, 2021 (the "Malta Holdings Acquisition Date"), the Company, through its indirect wholly owned subsidiary, Cowen Malta Holdings Ltd. (“Malta Holdings”), completed the acquisition of all of the outstanding equity interest of Axeria Insurance Limited (the “Acquisition"), an insurance company organized under the laws of Malta whose principal business activity is to provide insurance coverage to third parties (See Note 14). Axeria Insurance Limited was renamed Cowen Insurance Company Ltd (“Cowen Insurance Co”) upon acquisition. The Acquisition was completed for a combination of cash and deferred consideration. In the aggregate, the purchase price, assets acquired, and liabilities assumed were not significant and near-term impact to the Company and its consolidated results of operations and cash flows is not expected to be significant.

The aggregate estimated purchase price of the Acquisition was $12.7 million. On the Malta Holdings Acquisition Date, the Company paid upfront consideration of $12.5 million, with additional deferred consideration of $0.2 million. The deferred consideration liability is included within accounts payable, accrued expenses and other liabilities on the consolidated statements of financial condition.

The Acquisition was accounted for under the acquisition method of accounting in accordance with US GAAP. As such, the results of operations of the business acquired is included in the accompanying condensed consolidated statements of operations since the date of the Acquisition and the assets acquired, liabilities assumed recorded at their fair values within their respective line items on the accompanying condensed consolidated statement of financial condition. The Company has recognized a bargain purchase gain of $5.2 million related to the Acquisition and is shown net of associated tax of $1.3 million in the consolidated statement of operations. The bargain purchase gain is primarily driven by the recognition of the customer relationships intangible asset and a contractual discount on the closing equity balance at the Malta Holdings Acquisition Date. Additionally, following the Acquisition, the business acquired is included in the Cowen Investment Management reporting unit within the Operating Company segment.

The table below summarizes the preliminary purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as of February 26, 2021:


	(dollars in thousands)
Cash	$	14,844
Securities owned, at fair value	1,571
Fixed assets	30
Intangible assets	4,794
Other assets	12,828
Compensation payable	(17)
Other liabilities	(16,099)
Total net identifiable assets acquired and liabilities assumed	17,951
Bargain purchase gain	(5,216)
Total estimated purchase price	$	12,735

As of the Malta Holdings Acquisition Date, the estimated fair value of the Company's intangible assets, which are primarily broker relationships, was $4.6 million and had a weighted average useful life of 10 years. The licenses of $0.2 million has indefinite life. Amortization expense for the three months ended March 31, 2021 was insignificant.

As of March 31, 2021, the estimated amortization expense related to these intangible assets in future periods is as follows:


	(dollars in thousands)
2021	$	343
2022	458
2023	458
2024	458
2025	458
Thereafter	2,365
	$	4,540

In addition to the purchase price consideration, for the three months ended March 31, 2021, the Company had incurred acquisition-related expenses of $0.2 million, including financial advisory, legal and valuation services, which are included in professional, advisory and other fees in the accompanying condensed consolidated statements of operations.