XML 32 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
Acquisitions (Tables)
9 Months Ended
Sep. 30, 2018
Business Combinations [Abstract]  
Summary of Fair Value of Aggregate Consideration Paid or Payable

The following table summarizes the fair value of the aggregate consideration paid or payable for FeedbackNow (in thousands):

 

 

 

 

 

Cash paid at close (1)

$

8,425

 

Working capital adjustment (2)

 

798

 

Indemnity holdback (3)

 

1,485

 

Contingent purchase price (4)

 

3,015

 

Total

$

13,723

 

 

 

(1)

The cash paid at close represents the gross contractual amount paid. Net cash paid, which accounts for the cash acquired of $0.5 million, was $8.0 million and is reflected as an investing activity in the Consolidated Statements of Cash Flows.

 

(2)

Amount represents the provisional amount payable to the sellers based upon working capital as defined. This amount is subject to adjustment and the Company expects to pay the working capital adjustment by the end of 2018.

 

(3)

Approximately $0.5 million and $1.0 million of the holdback is expected to be paid during 2019 and 2020, respectively.

 

(4)

The acquisition of FeedbackNow includes a contingent consideration arrangement that requires additional consideration to be paid to the sellers based on the financial performance of FeedbackNow during the two-year period subsequent to the closing date.  Up to $1.7 million and $2.5 million could be payable during 2019 and 2020, respectively, if the financial targets are met. The range of undiscounted amounts that could be payable under this arrangement is zero to $4.2 million. The fair value of the contingent consideration recognized on the acquisition date, which represents purchase price, is $3.0 million. The fair value was estimated by applying a simulation valuation approach. That measure is based on significant Level 3 inputs not observable in the market. Key assumptions include projected financial results and the discount rate used. As of September 30, 2018, the change in the recognized amounts for the contingent consideration was immaterial and there was no change to the range of outcomes.

Summary of Preliminary Allocation of Purchase Price to Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the acquisition of FeedbackNow (in thousands):

 

 

 

 

 

 

Assets:

 

 

 

 

Cash

 

$

463

 

Accounts receivable

 

 

846

 

Prepaids and other current assets

 

 

465

 

Goodwill (1)

 

 

9,087

 

Acquired intangible assets (2)

 

 

4,780

 

Other assets

 

 

75

 

Total assets

 

 

15,716

 

Liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

 

908

 

Contract liabilities

 

 

260

 

Deferred tax liability

 

 

825

 

Total liabilities

 

 

1,993

 

Net assets acquired

 

$

13,723

 

 

(1) Goodwill represents the expected synergies from combining FeedbackNow with Forrester as well as the value of the acquired workforce.

(2) All of the acquired intangible assets are finite-lived. The determination of the fair value of the finite-lived intangible assets required management judgment and the consideration of a number of factors. In determining the fair values, management primarily relied on income valuation methodologies, in particular discounted cash flow models. The use of discounted cash flow models required the use of estimates, including projected cash flows related to the particular asset; the useful lives of the particular assets; the selection of royalty and discount rates used in the models; and certain published industry benchmark data. In establishing the estimated useful lives of the acquired intangible assets, the Company relied primarily on the duration of the cash flows utilized in the valuation model. Of the $4.8 million assigned to acquired intangible assets, $3.0 million was assigned to the technology asset class with a useful of 6.5 years, $1.3 million to customer relationships with a useful life of 4.5 years, and $0.5 million to trade names with a useful life of 8.5 years. Amortization of acquired intangible assets was $0.2 million for both the three and nine months ended September 30, 2018.