Business Acquisitions

12 Months Ended

Dec. 31, 2020

Acquisitions

Acquisition-related costs were $5.6 million, $1.9 million and $1.0 million during the years ended December 31, 2020, 2019 and 2018, respectively, and are included in general and administrative expense in the consolidated statements of income. Pro forma results of operations for the acquisitions completed in the years ended December 31, 2020 and 2019 have not been presented because the effects of the acquisitions, individually and in the aggregate, are not material to the Company's consolidated financial results. Revenue and earnings attributable to acquired operations since the dates of their acquisitions are included in the Company's consolidated statements of income and not presented separately because they are not material.

Inverse

In February 2021, the Company acquired Inverse, Inc., a Montreal-based company, for approximately $20.0 million. The allocation of the purchase price has not been finalized as of the filing of these financial statements. The acquisition is intended

to enhance the Company's enterprise security capabilities and expand its portfolio of zero trust and secure access service edge solutions for the internet of things.

2020 Acquisitions

Asavie

In October 2020, the Company acquired all outstanding stock of Asavie Technologies Limited ("Asavie"), a privately-funded company headquartered in Dublin, Ireland, for $155.0 million in cash. The allocation of the purchase price has not been finalized as of the filing of these financial statements. Asavie operates a global platform for managing the security, performance and access policies for mobile and internet-connected devices; its solutions will become part of Akamai’s security and personalization services product line.

The following table presents the preliminary allocation of the purchase price for Asavie (in thousands):


Total purchase consideration	$	154,952

Allocation of the purchase consideration:
Cash	$	26,847
Accounts receivable	14,002
Prepaid expenses and other current assets	995
Property and equipment	2,274
Operating lease right-of-use assets	6,104
Identifiable intangible assets	58,070
Goodwill	70,228
Other assets	395
Total assets acquired	178,915
Accounts payable	(951)
Accrued liabilities	(5,926)
Deferred revenue	(3,136)
Operating lease liabilities	(6,104)
Deferred income tax liabilities	(6,965)
Other liabilities	(881)
Total liabilities assumed	(23,963)
Net assets acquired	$	154,952

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. None of goodwill related to the acquisition of Asavie is expected to be deductible for tax purposes.

The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):


	Gross Carrying Amount		Weighted Average Useful Life (in years)
Completed technologies	$	17,300	10.1
Customer-related intangible assets	40,400		11.1
Trademarks	100		0.9
Non-compete agreements	270		2.9
Total	$	58,070

The total weighted average amortization period for the intangible assets acquired from Asavie is 10.8 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

Instart Logic

In February 2020, the Company acquired certain assets from Instart Logic, Inc., a provider of cloud solutions for improving web and mobile application performance, for $36.4 million in cash. The purchase price was primarily allocated to a customer-related intangible asset that will be amortized over 17 years in a pattern that matches expense with expected economic benefits.

2019 Acquisitions

ChameleonX

In November 2019, the Company acquired ChameleonX, Ltd. ("ChameleonX"), an Israel-based company with a solution designed to detect when a website contains or links to malware that causes end user data to be compromised, for $11.9 million in cash. The acquisition is expected to further strengthen the Company's security solutions portfolio. The Company allocated $7.1 million of the cost of the acquisition to goodwill and $6.1 million to a technology-related identifiable intangible asset with an average useful life of 7.1 years. The value of the goodwill is primarily attributable to synergies related to the integration of ChameleonX technology onto the Company's platform as well as a trained technical workforce. The total amount of goodwill related to the acquisition of ChameleonX expected to be deductible for tax purposes is $7.1 million. The Company finalized its allocation of purchase price in the fourth quarter of 2020, which did not result in a material change to the preliminary allocation.

Exceda

On November 1, 2019, in a series of stock and asset purchase transactions, the Company acquired the operations of a group of companies known as Exceda, a vendor of content delivery network and web security services and, collectively, the Company's largest channel partner in Latin America, for $32.7 million in cash. The acquisition is expected to enable the Company to expand its Latin America business more quickly, better support existing and new partners and improve experiences for more customers. The Company allocated $14.7 million of the cost of the acquisition to goodwill and $16.5 million to identifiable intangible assets, primarily customer-related. The total weighted average useful life of the intangible assets acquired from Exceda is 8.1 years. The value of the goodwill is primarily attributable to synergies related to the scale of the combined teams as well as Exceda's trained technical workforce. The total amount of goodwill related to the acquisition of Exceda expected to be deductible for tax purposes is $14.7 million.

The Company acquired various obligations as part of the acquisition for which it is indemnified. The total obligations recorded, with corresponding indemnification asset, totaled $20.0 million. The Company finalized its allocation of purchase price in the fourth quarter of 2020, which did not result in a material change to the preliminary allocation.

Janrain

In January 2019, the Company acquired Janrain, Inc. ("Janrain"), a provider of customer identity and access management solutions, for $123.6 million in cash. The Company incorporated the Janrain technology into its Intelligent Edge Platform. The Company finalized its allocation of purchase price in the fourth quarter of 2019. The following table presents the final allocation of the purchase price for Janrain (in thousands):


Total purchase consideration	$	123,632

Allocation of the purchase consideration:
Cash	$	2,223
Accounts receivable	7,318
Prepaid expenses and other current assets	838
Identifiable intangible assets	26,930
Goodwill	92,188
Deferred tax asset	12,622
Other assets	87
Total assets acquired	142,206
Accounts payable	(1,642)
Accrued liabilities	(2,596)
Deferred revenue	(14,336)

Total liabilities assumed	(18,574)
Net assets acquired	$	123,632

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Janrain expected to be deductible for tax purposes is $45.7 million.

The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):


	Gross Carrying Amount		Weighted Average Useful Life (in years)
Completed technologies	$	9,000	7.9
Customer-related intangible assets	17,700		13.9
Trademarks	200		1.9
Non-compete agreements	30		1.9
Total	$	26,930

The total weighted average amortization period for the intangible assets acquired from Janrain is 11.8 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.