Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets, Net

v3.22.4
Goodwill and Intangible Assets, Net
 12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure
14. Goodwill and Intangible Assets, Net
Goodwill consisted of the following (in thousands):
For the year ended December 31, 2022 For the nine months ended December 31, 2021 For the three months ended March 31, 2021
Successor Predecessor
Beginning balance $ —  $ —  $ 121,233 
Additions from acquisitions —  1,294,230  7,517 
Impairment —  (1,294,230) — 
Ending balance $ —  $ —  $ 128,750 
For the nine months ended December 31, 2021, the Company recognized impairment to goodwill of $1,294 million. This impairment was recognized in impairment of goodwill, intangibles, and other assets in the Consolidated Statements of Operations. The Company did not identify any goodwill impairment for the Predecessor three months ended March 31, 2021 or the year ended December 31, 2020.
Intangible assets, net, consisted of the following (in thousands):
December 31, 2022 Amortization Period (Years) Cost Accumulated Amortization Impairment Net
Non-amortizing intangibles
Trade name N/A $ 91,600  $ —  $ (58,500) $ 33,100 
Total non-amortizing intangibles $ 91,600  $ —  $ (58,500) $ 33,100 
Amortizing intangibles
Broker/customer relationships
8 - 15
 $ 541,100  $ (92,352) $ (107,293) $ 341,455 
Trade names and other
   5 - 10(1)
10,937  (2,165) (8,772) — 
Total amortizing intangibles $ 552,037  $ (94,517) $ (116,065) $ 341,455 
Total intangibles $ 643,637  $ (94,517) $ (174,565) $ 374,555 
(1)As of December 31, 2022, trade names and other intangibles is $0. This was the amortization period prior to the impairment.
December 31, 2021 Amortization Period (Years) Cost Accumulated Amortization Impairment Net
Non-amortizing intangibles
Trade name
N/A
 $ 178,000  $ —  $ (86,400) $ 91,600 
Total non-amortizing intangibles $ 178,000  $ —  $ (86,400) $ 91,600 
Amortizing intangibles
Broker/customer relationships
8 - 15
 $ 541,100  $ (39,711) $ —  $ 501,389 
Trade names and other
5 - 10
 10,937  (1,026) —  9,911 
Total amortizing intangibles $ 552,037  $ (40,737) $ —  $ 511,300 
Total intangibles $ 730,037  $ (40,737) $ (86,400) $ 602,900 

Intangible assets deemed to have an indefinite life are not amortized but are instead reviewed annually for impairment of value or when indicators of a potential impairment are present. The Company performs its annual impairment testing as of October 1 and monitors for interim triggering events on an ongoing basis as events occur or circumstances change. During the first half of 2022, the Company observed that inflationary measures began to rise, reducing the demand for mortgage products from its Mortgage Originations segment and responded by implementing cost-cutting measures. As the length and magnitude of the downturn in mortgage demand continued during the third quarter of 2022, including increasingly compressed margins and longer expected duration of such market pressures, an interim impairment analysis was triggered as of September 30, 2022. In addition, the Company performed its annual impairment testing in the fourth quarter of 2022. The Company estimated the fair value of the indefinite life intangibles for all the reporting units utilizing a relief from royalty approach and the significant assumptions used to measure fair value include discount rate, terminal factors, and royalty rate. These valuations resulted in a Level 3 nonrecurring fair value measurement. Based on the analyses, the Company recognized an indefinite-lived intangible asset impairment of $51.2 million as of September 30, 2022 and an additional impairment of $7.3 million during the fourth quarter of 2022, totaling $58.5 million for the year ended December 31, 2022. The impairment was recognized in impairment of goodwill, intangibles, and other assets in the Consolidated Statements of Operations. The impairment of these intangible assets for each reporting unit is as follows: $41.9 million at the Mortgage Originations reporting unit, $5.5 million at the Commercial Originations reporting unit, $3.8 million at the Lender Services reporting unit, $3.8 million at the Portfolio Management reporting unit, and $3.5 million at the Reverse Originations reporting unit. The Company recognized an indefinite-lived intangible asset impairment of
$86.4 million in the Successor nine months ended December 31, 2021. There was no indefinite-lived intangible asset impairment in the Predecessor three months ended March 31, 2021 or the year ended December 31, 2020.
The Company’s definite-lived intangible assets comprise various broker/customer relationships, certain technological assets and definite-lived trade names acquired through various acquisitions. These assets are amortized on a straight-line basis over their useful lives and are subject to recoverability testing whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, in accordance with ASC 360. During the second half of 2022, the Company observed that the length and magnitude of the downturn in mortgage demand had significantly increased compared to prior periods. The Company also saw decreased demand for products in the Lender Services segment. As a result, our Mortgage Origination and Lender Services reporting units' current and expected future operating losses indicated that the definite-lived intangible assets included in the reporting unit may not be recoverable, and impairment analyses were performed. The Company estimated the fair value of the definite lived intangibles using a combination of a discounted cash flow model, where the estimated future cash flows and discount rate were the significant assumptions, and a market approach. Based on the analyses, the Company wrote off and recognized a definite-lived intangible asset impairment of $72.0 million and $44.1 million in the year ended December 31, 2022 for the Mortgage Originations and Lender Services reporting units, respectively. The impairment was recognized in impairment of goodwill, intangibles, and other assets in the Consolidated Statements of Operations. There were no definite-lived intangible asset impairments in the Successor nine months ended December 31, 2021 or in the Predecessor three months ended March 31, 2021 or the year ended December 31, 2020.
Amortization expense for the Successor periods was $53.8 million and $41.1 million for the year ended December 31, 2022 and for the nine months ended December 31, 2021, respectively. Amortization expense for the Predecessor periods was $0.6 million and $2.5 million for the three months ended March 31, 2021 and for the year ended December 31, 2020, respectively.
The estimated amortization expense for each of the five succeeding fiscal years and thereafter as of December 31, 2022 is as follows (in thousands):
Year Ending December 31, Amount
2023 $ 43,687 
2024 43,687 
2025 43,687 
2026 43,687 
2027 43,687 
Thereafter 123,020 
Total future amortization expense $ 341,455