(4) Divestitures and Acquisitions

ITG Investment Research, LLC

On May 27, 2016, the Company completed the sale of ITG Investment Research, LLC (“Investment Research”), a wholly owned subsidiary of the Company, to a wholly owned subsidiary of Leucadia National Corporation for $12 million in cash consideration.

Upon completion of the sale, the Company recorded a pre-tax gain of approximately $21,000 and an after-tax gain of approximately $50,000. The pre-tax gain is recorded in other revenue on the Consolidated Statement of Operations as of December 31, 2016. The pre-tax gain is net of direct costs to sell Investment Research, including professional fees, cash compensation and the acceleration of previously issued restricted stock unit awards.

The following table summarizes the components of the pre-tax gain (dollars in thousands):


Cash proceeds from sale	$	12,000
Carrying value of net assets disposed		(7,502)
Direct selling costs		(4,477)
Pre-tax gain on sale	$	21

As a result of this divestiture, the Company reduced the headcount within its U.S. high-touch sales trading operation. For more information, see Note 5, Restructuring Charges.

The Company determined that the sale of Investment Research did not meet the requirements to be treated as a discontinued operation. As such, the results of Investment Research through the sale date of May 27, 2016 are included in continued operations on the Consolidated Statement of Operations, primarily in the U.S. Operations segment.

Energy Research Operations

On December 22, 2015, the Company completed the sale of the subsidiaries conducting its energy research operations to an affiliate of Warburg Pincus (“Buyer”), pursuant to an agreement dated November 5, 2015. Upon closing of the sale, the Buyer paid the Company $120.5 million in cash consideration. As part of this transaction, the Company agreed to distribute energy research to its institutional clients, serving as the exclusive sales partner for institutional investors for at least two years. Per an amendment, this distribution agreement was terminated as of December 31, 2016.

The Company recorded a pre-tax gain upon completion of the sale of $107.7 million and an after-tax gain of $91.4 million. The pre-tax gain is recorded in other revenue on the Consolidated Statement of Operations for the year ended December 31, 2015. The pre-tax gain is net of a working capital adjustment on the closing balance sheet and direct costs to sell the energy research business, including professional fees, cash compensation, the acceleration of previously-issued deferred stock awards and $0.2 million of currency translation losses reclassified to the results of operations.

The following table summarizes the components of the pre-tax gain (dollars in thousands):


Cash proceeds from sale	$	120,500
Working capital adjustment		(1,615)
Carrying value of net assets disposed		(3,025)
Direct selling costs		(8,161)
Pre-tax gain on sale	$	107,699

The Company determined that the sale of the energy research operations did not represent a strategic shift that would have a major effect on its operations and financial results and therefore the energy research operations did not meet the requirements to be treated as a discontinued operation. As such, the results of the energy research operations through the sale date of December 22, 2015 are included in continued operations on the Consolidated Statement of Operations, primarily in the U.S. Operations segment.

ID’S

On July 30, 2014, the Company acquired 100% of ID’S for $22.5 million, including acquired cash of $4.2 million. ID’S, subsequently renamed ITG Software Solutions (France) SAS (“ITGSSF”), is a Paris-based company that supports RFQ-hub, a multi-asset platform for global-listed and over-the-counter (“OTC”) financial instruments. RFQ-hub connects buy-side trading desks and portfolio managers with a large network of sell side market makers, allowing these trading desks to place requests-for-quotes in OTC-negotiated equities, futures, options, swaps, convertible bonds, structured products and commodities. The platform will remain available on a standalone basis and has been integrated into ITG’s Triton execution management system.

The results of ITGSSF have been included in the Company’s consolidated financial statements since its acquisition date. At closing, $22.5 million was paid. Contingent payments of approximately $4.8 million were available to the sellers if certain revenue targets were achieved in 2015. None of the contingent payments were recognized as the revenue targets were not achieved as of December 31, 2015.

The following table summarizes the fair values of assets acquired and liabilities assumed at the date of the acquisition (dollars in thousands):


Cash consideration	$	22,499
Total purchase price	$	22,499
Cash	$	4,206
Accounts receivable, net		1,035
Customer related intangibles		2,674
Computer software		2,273
Trade Name		160
Deferred Tax Liability		(1,650)
Goodwill		13,801
Total purchase price	$	22,499

The goodwill and intangible assets were assigned to the European Operations segment. The acquired customer relationships and internal developed software are amortized over 15 and 5 years, respectively. The trade name has an indefinite life. The goodwill and intangible assets are not deductible for tax purposes.

The Company incurred professional fees related to this transaction of $0.8 million, which has been included in other general and administrative expenses in the Consolidated Statements of Operations for the year ended December 31, 2015.