Acquisitions

Lovoo

On October 19, 2017, the Company acquired from Bawogo Ventures GmbH & Co. KG, a limited partnership organized under the laws of Germany, all of the outstanding shares of Lovoo, a limited liability company incorporated under the laws of Germany (the “Lovoo Acquisition”), for total consideration of $86.1 million including working capital. The Company does not expect goodwill to be deductible for tax purposes.

Included in the total consideration of $86.1 million is a $5.0 million contingent consideration in the form of an earn-out which was subject to certain conditions set forth in the Purchase Agreement, including the successful achievement of an Adjusted EBITDA target by Lovoo for the year ended December 31, 2017. Based on the probability of achieving the financial targets, the Company has determined that the fair value of the contingent consideration at the closing date was $5.0 million. The Company paid the full amount of the contingent consideration in April 2018.

The Company incurred a total of $1.4 million in transaction costs in connection with the Lovoo Acquisition, which were expensed as incurred in the consolidated statement of operations for the year ended December 31, 2017.

The acquisition-date fair value of the consideration transferred is as follows:



	At October 19, 2017
Cash consideration ⁽¹⁾	$	65,000,000
Contingent consideration	5,000,000
Net working capital adjustment	16,148,750
Total consideration	$	86,148,750

(1) Cash consideration includes a $6.5 million and a $4.0 million escrow payment to be paid out 24 months and 36 months, respectively, from the date of the transaction.

The following is a preliminary purchase price allocation as of the October 19, 2017 acquisition date:



	At October 19, 2017
Cash and cash equivalents	$	20,717,202
Accounts receivable	3,677,708
Prepaid expenses and other current assets	843,930
Property and equipment	1,014,716
Intangible assets	16,970,000
Accounts payable	(1,100,837		)
Accrued expenses and other current liabilities	(4,652,757		)
Deferred revenue	(1,594,641		)
Deferred tax liability	(3,862,337		)
Capital leases	(542,112		)
Net assets acquired	$	31,470,872
Goodwill	54,677,878
Total consideration	$	86,148,750

The fair values of the Lovoo trademarks were determined using an income approach, the fair value of software acquired, which represents the primary platform on which the Lovoo apps operate, was determined using a cost approach and the fair value of customer relationships was determined using an excess earnings approach. These values are subject to change based on the final assessment of the deferred taxes acquired. The amounts assigned to the identifiable intangible assets are as follows:



	Fair Value		Weighted Average Amortization Period (Years)
Trademark	$	12,090,000	10.0
Software	1,335,000		2.0
Customer relationships	3,545,000		8.7
Total identifiable intangible assets	$	16,970,000	9.1