Acquisitions

The Company's strategy includes growing its businesses and building shareholder value through strategic acquisitions. The Company’s acquisitions have been accounted for as business combinations. Net assets and results of operations are included in the Company’s consolidated financial statements commencing at the respective purchase closing dates. In connection with acquisitions, the Company records the estimated values of the net tangible assets and the identifiable intangible assets purchased, which typically consist of customer lists, developed technology, trademarks and non-compete agreements. The valuation of purchased intangible assets involves significant estimates and assumptions. Refinement and completion of final valuation of net assets acquired could affect the carrying value of tangible assets, goodwill and identifiable intangible assets.

The Risk and Insurance Services segment completed seven acquisitions during the first six months of 2018.


•	February – MMA acquired Highsmith Insurance Agency, a North Carolina-based independent insurance brokerage firm.


•	March – Marsh acquired Hoken Soken, Inc., a Japan-based insurance agency.


•	May – Marsh acquired Mountlodge Limited, a Scotland-based independent insurance broker and Lorant Martínez Salas y Compañía Agente de Seguros y de Fianzas, S.A. de C.V., a Mexico-based multi-line insurance broker.


•	June – MMA acquired Bleakley Insurance Services, a California-based provider of employee benefits solutions; Klein Agency, Inc., a Minnesota-based surety and property/casualty agency; and Insurance Associates, Inc., a Maryland-based independent insurance agency.

The Consulting segment completed five acquisitions during the first six months of 2018.


•	January – Oliver Wyman acquired Draw Ltd., a U.K.-based digital transformation agency.


•	March – Oliver Wyman acquired 8Works Limited, a U.K.-based design thinking consultancy.


•	May – Mercer acquired EverBe SAS, a France-based Workday implementer and advisory firm; and Evolve Intelligence Pty Ltd., an Australia-based talent strategy firm.


•	June – Mercer acquired India Life Capital Private Ltd., an India-based investment advisor.

Total purchase consideration for acquisitions made during the six months ended June 30, 2018 was $192 million, which consisted of cash paid of $160 million and deferred purchase and estimated contingent consideration of $32 million. Contingent consideration arrangements are based primarily on earnings before interest, tax, depreciation and amortization ("EBITDA") or revenue targets over a period of two to four years. The fair value of the contingent consideration was based on projected revenue or EBITDA of the acquired entities. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized. The Company also paid $53 million of deferred purchase consideration and $41 million of contingent consideration related to acquisitions made in prior years.

The following table presents the preliminary allocation of the acquisition cost to the assets acquired and liabilities assumed during 2018 based on their fair values:



For the Six Months Ended June 30, 2018
(In millions)
Cash	$	160
Estimated fair value of deferred/contingent consideration	32
Total Consideration	$	192
Allocation of purchase price:
Cash and cash equivalents	$	16
Accounts receivable, net	12
Property, plant, and equipment	3
Other intangible assets	73
Goodwill	116
Total assets acquired	220
Current liabilities	10
Other liabilities	18
Total liabilities assumed	28
Net assets acquired	$	192

Other intangible assets acquired are based on initial estimates and subject to change based on final valuations during the measurement period post acquisition date. The following chart provides information about other intangible assets acquired during 2018:

Prior-Year Acquisitions

The Risk and Insurance Services segment completed seven acquisitions during 2017.


•	January – MMA acquired J. Smith Lanier & Co. ("JSL"), a privately held insurance brokerage firm providing insurance, risk management, and employee benefits solutions to businesses and individuals throughout the U.S.


•	February – MMA acquired iaConsulting, a Texas-based employee benefits consulting firm.


•	March – MMA acquired Blakestad, Inc., a Minnesota-based private client and commercial lines insurance agency, and RJF Financial Services, a Minnesota-based retirement advisory firm.


•	May – MMA acquired Insurance Partners of Texas, a Texas-based employee benefits consulting firm.


•	August – Marsh acquired International Catastrophe Insurance Managers, LLC, a Colorado-based managing general agent providing property catastrophe insurance to business and homeowners, and MMA acquired Hendrick & Hendrick, Inc., a Texas-based insurance agency.

The Consulting segment completed three acquisitions during 2017.


•	August – Mercer acquired Jaeson Associates, a Portugal-based talent management consulting organization.


•	December – Mercer acquired Promerit AG, a Germany-based consultancy specializing in HR digitalization and business and HR transformation and BFC Asset Management Co., Ltd., a Japan-based independently owned asset manager, focused on alternative investment strategies.

Total purchase consideration for acquisitions made during the first six months of 2017 was $510 million, which consisted of cash paid of $420 million and deferred purchase and estimated contingent consideration of $90 million. Contingent consideration arrangements are primarily based on EBITDA or revenue targets over a period of two to four years. The fair value of the contingent consideration was based on projected revenue or earnings of the acquired entities. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized. In the first six months of 2017, the Company also paid $37 million of deferred purchase consideration and $65 million of contingent consideration related to acquisitions made in prior years.

Pro-Forma Information

The following unaudited pro-forma financial data gives effect to the acquisitions made by the Company during 2018 and 2017. In accordance with accounting guidance related to pro-forma disclosures, the information presented for current year acquisitions is as if they occurred on January 1, 2017 and reflects acquisitions made in 2017 as if they occurred on January 1, 2016. The unaudited pro-forma information adjusts for the effects of amortization of acquired intangibles. The unaudited pro-forma financial data is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved if such acquisitions had occurred on the dates indicated, nor is it necessarily indicative of future consolidated results.



	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share figures)	2018		2017		2018		2017
Revenue	$	3,748	$	3,539	$	7,770	$	7,098
Net income attributable to the Company	$	532	$	503	$	1,225	$	1,072
Basic net income per share attributable to the Company	$	1.05	$	0.98	$	2.41	$	2.08
Diluted net income per share attributable to the Company	$	1.04	$	0.97	$	2.39	$	2.06

The consolidated statements of income include the results of operations of acquired companies since their respective acquisition dates. The consolidated statements of income for the three and six month periods ended June 30, 2018 include approximately $11 million and $14 million of revenue, respectively, and an operating loss of $1 million and $2 million, respectively, for acquisitions made in 2018. The consolidated statements of income for the three and six month periods ended June 30, 2017 included $34 million and $63 million of revenue, respectively, and operating income of $5 million and $15 million, respectively, related to acquisitions made in 2017.

Subsequent Events

On June 25th, the Company announced an agreement to acquire Wortham Insurance, a Houston based independent insurance broker with more than $130 million of revenue and 530 colleagues. The transaction is expected to close in the third quarter of 2018.

In July, 2018, the Company entered into a agreement to sell Marsh ClearSight, a cloud based technology platform. The disposal of Marsh ClearSight is not expected to have a significant impact on the Company’s ongoing revenue or results of operations.

Weighted Average Amortization Period

Client relationships