Acquisitions/Dispositions

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 value of the net tangible assets purchased and the value of the identifiable intangible assets purchased, which typically consist of purchased customer lists, trademarks and non-compete agreements. The valuation of purchased intangible assets involves significant estimates and assumptions. Until final valuations are complete, any change in assumptions could affect the carrying value of tangible assets, goodwill and identifiable intangible assets.

The Risk and Insurance Services segment completed twelve acquisitions during 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.


•	August – Marsh acquired John L. Wortham & Son, L.P., a Houston-based independent insurance broker.


•	October – MMA acquired Eustis Insurance, Inc., a Louisiana-based insurance agency.


•	November – MMA acquired James P. Murphy & Associates, Inc., a Connecticut-based insurance agency.


•	December – MMA acquired Otis-Magie Insurance Agency, Inc., a Minnesota-based insurance agency, and Marsh acquired Hector Insurance PCC Ltd, a U.K.-based captive management company.

The Consulting segment completed eight acquisitions during 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.


•	November – Mercer acquired Induslynk Training Services Private Ltd., an India-based talent assessment company, Pavilion Financial Corp., a Canada-based investment services firm and Summit Strategies Inc., a Missouri-based investment consulting firm.

Total purchase consideration for acquisitions made during 2018 was approximately $1.04 billion, which consisted of cash paid of $910 million and deferred purchase and estimated contingent consideration of $133 million. Contingent consideration arrangements are based primarily on EBITDA and/or revenue targets over periods of two to four years. The fair value of the contingent consideration was based on projected revenue and earnings of the acquired entities. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized. During 2018, the Company also paid $62 million of deferred purchase consideration and $91 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, based on their fair values:



(In millions)	2018
Cash	$	910
Estimated fair value of deferred/contingent consideration	133
Total consideration	$	1,043
Allocation of purchase price:
Cash and cash equivalents	$	26
Accounts receivable, net	49
Other current assets	4
Property, plant, and equipment	8
Other intangible assets	405
Goodwill	626
Other assets	8
Total assets acquired	1,126
Current liabilities	37
Other liabilities	46
Total liabilities assumed	83
Net assets acquired	$	1,043

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 of other intangible assets acquired during 2018:

(a) Primarily non-compete agreements, trade names and developed technology.

Prior Year Acquisitions

During 2017, the Risk and Insurance Services segment completed 7 acquisitions.


•	January – Marsh & McLennan Agency ("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 3 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 2017 was approximately $777 million, which consisted of cash paid of $668 million and deferred purchase and estimated contingent consideration of $109 million. Contingent consideration arrangements are based primarily on EBITDA and/or revenue targets over periods of two to four years. The fair value of the contingent consideration was based on projected revenue and earnings of the acquired entities. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized. During 2017, the Company also paid $55 million of deferred purchase consideration and $108 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, 2017 and 2016. 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 2016 information includes 2016 acquisitions as if they occurred on January 1, 2015. The pro-forma information includes 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.



	Years Ended December 31,
(In millions, except per share data)	2018		2017		2016
Revenue	$	15,174	$	14,440	$	13,724
Income from continuing operations	$	1,680	$	1,516	$	1,787
Net income attributable to the Company	$	1,660	$	1,498	$	1,759
Basic net income per share:
– Continuing operations	$	3.28	$	2.92	$	3.39
– Net income attributable to the Company	$	3.28	$	2.92	$	3.39
Diluted net income per share:
– Continuing operations	$	3.25	$	2.88	$	3.36
– Net income attributable to the Company	$	3.25	$	2.89	$	3.36

The consolidated statement of income for 2018 includes approximately $120 million of revenue and $2 million of operating income related to acquisitions made during 2018. The consolidated statement of income for 2017 includes approximately $156 million of revenue and $19 million of operating income related to acquisitions made during 2017, and the consolidated statement of income for 2016 includes approximately $25 million of revenue and $4 million of operating income related to acquisitions made during 2016.

Acquisition-related expenses incurred in 2018 and 2017 were $7 million and $3 million, respectively.

Pending Acquisition

On September 18, 2018, the Company announced that it had reached agreement on the terms of a recommended cash acquisition of Jardine Lloyd Thompson Group plc ("JLT"), a public company organized under the laws of England and Wales (the "Transaction"). JLT is a provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services with annual revenue of approximately $2 billion and 10,000 colleagues. Under the terms of the Transaction, JLT shareholders will receive £19.15 in cash for each JLT share, which values JLT’s existing issued and to be issued share capital at approximately £4.3 billion (or approximately $5.6 billion based on an exchange rate of U.S. $1.31:£1). The Company intends to implement the Transaction by way of a scheme of arrangement under Part 26 of the United Kingdom Companies Act 2006, as amended.

On November 7, 2018, the Transaction received the requisite approval of JLT shareholders. The Transaction remains subject to conditions and certain further terms, including, among others, (i) the sanction of the Transaction by the High Court of Justice in England and Wales, (ii) completion of the Transaction no later than December 31, 2019 and (iii) the receipt of certain antitrust, regulatory and other approvals. Subject to the satisfaction or waiver of all relevant conditions, the Transaction is expected to be completed in the spring of 2019.

Financing and hedging activities related to the Transaction are discussed in more detail in Notes 11 and 13 of the consolidated financial statements.

Dispositions

In September 2018, Marsh completed its sale of a risk management software and services business resulting in a pre-tax gain of $46 million, which is included in revenue in the consolidated statement of income.

In December 2015, Mercer sold its U.S. defined contribution recordkeeping business. The Company recognized a pre-tax gain of $6 million in 2016 from this transaction, which is included in revenue in the consolidated statements of income in that year.

Weighted Average Amortization Period

Client relationships