12. Acquisitions

Jibe Consulting, Inc.

Effective May 1, 2017, the Company acquired certain assets and liabilities of Jibe Consulting, Inc. (“Jibe”), a U.S.- based Oracle E-Business Suite (“EBS”) and Oracle Cloud Business Application implementation firm. The acquisition of Jibe enhances the Company’s Cloud Application capabilities and strongly complements its market leading EPM transformation and technology implementation group.

Management’s purchase consideration was $5.4 million in cash, not subject to vesting, and $3.6 million in shares of the Company’s common stock, subject to vesting. The equity that was issued has a four-year vesting term and will be recorded as compensation expense over the respective vesting period. In addition, the Sellers have the opportunity to earn an additional $6.6 million in cash and $4.4 million in Company stock based on the achievement of performance targets over the next 18 months for a total of $11.0 million in contingent consideration. The cash related to the contingent consideration is not subject to service vesting and has been accounted for as part of the purchase consideration. This contingent liability has been recorded in the consolidated balance sheet as non-current accrued expenses and other liabilities. The equity related to the contingent consideration will be subject to service vesting and will be recorded as compensation expense over the respective vesting period. As of June 30, 2017, the Company has recorded $0.3 million of non-cash stock compensation related to the equity portion of the closing consideration and the equity portion of the contingent consideration. The initial cash consideration was funded from borrowings under the Company’s Revolver.

12. Acquisitions (continued)

The purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of the acquisition. Management is currently working to complete the valuation of identified intangible assets, goodwill and related deferred income taxes. As additional information, as of the acquisition date, becomes available and as management completes its evaluation, the preliminary purchase price allocation may be revised during the remainder of the measurement period (which will not exceed 12 months from the Acquisition Date). Any such revisions or changes may be material as the fair values of the tangible and intangible assets acquired and liabilities assumed are finalized. The following table presents the preliminary purchase price allocation of the assets acquired and liabilities assumed, based on the fair values (in thousands):

	Purchase Price
	Allocation
Total purchase consideration	$	12,000
Accounts receivable		1,932
Other current assets		59
Total current assets acquired		1,991
Intangible assets		898
Goodwill		10,278
Total assets		13,167
Other accrued expenses		1,167
Total liabilities acquired		1,167
Purchase consideration on acquisition	$	12,000

The recognized goodwill is primarily attributable the benefits the Company expects to derive from enhanced market opportunities. The acquired intangible assets with definite lives are amortized over periods ranging from 2 to 5 years. The following table presents the preliminary intangible assets acquired from Jibe:

	Amount		Useful Life
Category	(in thousands)		(in years)
Customer Base	$	147,000	5
Customer Backlog		328,000	2
Non-Compete		423,000	5
	$	898,000

The acquisition was not material to the Company's results of operations, financial position, or cash flows and, therefore, the pro forma impact of these acquisitions is not presented. During the three months ended June 30, 2017, Jibe contributed $2.8 million of revenue before reimbursable expenses and contribution before depreciation, amortization, interest, corporate overhead allocation and taxes of $0.2 million. The acquisition related costs incurred in the second quarter of 2017 totaled $0.2 million and were all classified in selling, general and administrative costs in the Consolidated Statements of Operations. All goodwill is expected to be deductible for tax purposes.

Aecus Limited

Effective April 6, 2017, the Company acquired 100% of the equity of the U.K.-based operations of Aecus Limited (“Aecus”), a European Outsourcing Advisory and Robotics Process Automation (“RPA”) consulting firm. This acquisition strongly complements the global strategy and business transformation offerings of the Hackett Group.

Management’s purchase consideration was £3.2 million in cash. In addition, the sellers have the opportunity to earn an additional £2.4 million in contingent consideration in cash based on the achievement of performance targets achieved over the next 12 months and key personnel have the opportunity to earn £0.3 million in cash and £0.3 million in the Company’s common stock. The contingent consideration for the selling shareholders and key personnel is subject to performance and service periods and will be accounted for as compensation expense. As of June 30, 2017, the Company had recorded a total of $0.4 million of acquisition related compensation expense and acquisition non-cash stock compensation expense for the cash and equity portion of the contingent consideration. The closing purchase consideration was funded with the Company’s available funds.

12. Acquisitions (continued)

	Purchase Price
	Allocation
Total purchase consideration	£	3,173
Cash		209
Accounts receivable		898
Other current assets		46
Total current assets acquired		1,153
Intangible assets		1,515
Goodwill		1,306
Total assets		3,974
Other accrued expenses		801
Total liabilities acquired		801
Purchase consideration on acquisition	£	3,173

	Amount		Useful Life
Category	(in thousands)		(in years)
Customer Base	£	455,000	5
Customer Backlog		52,000	2
Non-Compete		1,008,000	5
	£	1,515,000

The acquisition was not material to the Company's results of operations, financial position, or cash flows and, therefore, the pro forma impact of these acquisitions is not presented. During the three months ended June 30, 2017, Aecus contributed $1.3 million of revenue before reimbursable expenses and contribution before depreciation, amortization, interest, corporate overhead allocation and taxes of $0.2 million. The acquisition related costs incurred during the first six months of 2017 totaled $0.1 million and were all classified in selling, general and administrative costs in the Consolidated Statements of Operations. The goodwill and intangibles resulting from this transaction are not expected to be deductible under UK tax regulations.