In July 2021, the Company acquired e-bot7, a Conversational AI company based in Germany for a purchase price of $50.7 million. This acquisition is accounted for as a part of the Company’s Business segment. This transaction was accounted for as a business combination. The purchase price consisted of approximately $24.3 million in cash, $20.2 million in shares of common stock of the Company, and potential earn-out consideration of up to $8.8 million in common stock of the Company, which is based on achieving certain objectives and milestones and is included as part of the purchase price. The current fair value of the earn-out is $6.2 million. Also as part of the transaction, there is a potential earn-out consideration of up to $4.4 million payable in common stock of the Company that is being treated as compensation expense over the next two years. The earn-out consideration cannot exceed the maximum base earn-out consideration of $3.9 million. The base earn-out payment consists of the revenue earn-out payment only. The fair value of the revenue earn-out consideration is approximately $3.1 million of the current fair value of the earn-out of $6.2 million. The Company incurred $1.5 million in acquisition costs for this transaction that were expensed in the year ended December 31, 2021, and are included in General and administrative expense in the accompanying consolidated statements of operations.

The purchase price allocation resulted in approximately $45.1 million of goodwill and $7.7 million of intangible assets. The goodwill will not be deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. A deferred tax liability for the identified intangibles has been recorded.


	e-bot7 Acquisition
	(In thousands)
Assets acquired
Cash	$	1,325
Other current assets	706
Intangible assets	7,714
Other assets	221
Assets acquired	$	9,966
Liabilities assumed
Current liabilities assumed	$	(1,055)
Long-term liabilities assumed	(3,063)
Deferred tax liabilities, non-current	(315)
Total liabilities assumed	$	(4,433)
Net assets acquired	5,533
Total acquisition consideration	50,678
Goodwill	$	45,145

Other current assets acquired in connection with the acquisition consisted primarily of accounts receivable and other short term assets. Current liabilities assumed in connection with the acquisition consisted primarily of accounts payable and other short term liabilities. Long-term liabilities assumed in connection with the acquisition consisted of the long-term portion of deferred revenue, other long-term liabilities, and long-term debt, which was paid in full subsequent to the acquisition date.

The Company applied a relief from royalty method of the income approach to estimate the present values of the intangible assets acquired. The intangible assets acquired in the business acquisition were technology, customer relationships, and trademark for the fair value of $7.7 million, determined based on the present value of royalty savings after-tax benefits, attributable to total revenue of the Company. The Company applied various estimates and assumptions with respect to forecasted revenue growth rates, the revenue attributable to the existing customers over time and the discount rate. The fair values assigned to the other tangible and identifiable intangible assets acquired and liabilities assumed as part of the business combination were based on management’s estimates and assumptions. The Company began amortizing the customer relationships on the date of acquisition over a period of ten years based on expected future cash flow attributable to existing revenue by customer type. The amortization expense is recorded to amortization of purchased intangibles in the consolidated statements of operations.

In October 2021, the Company acquired VoiceBase, Inc., a voice analytics platform operating in the United States for a purchase price of $111.4 million. This acquisition is accounted for as a part of the Company’s Business segment. This transaction was accounted for as a business combination. The purchase price consisted of approximately $17.1 million in cash,

$63.8 million in shares of common stock of the Company, a management retention plan (“MIP”) of $9.3 million to be paid in shares of common stock of the Company, potential earn-out consideration of up to $16.7 million in common stock of the Company, which is based on achieving certain objectives and milestones and is included as part of the purchase price, and replacement options of $4.5 million, which means an option granted by LivePerson to purchase its common stock granted under the VoiceBase, Inc. 2010 Equity Incentive Plan, as amended (the “VoiceBase Stock Plan”), whether vested or unvested. The current fair value of the earn-out is $22.5 million, of which $5.8 million payable in common stock of the Company is being treated as compensation expense over the next two years. The earn-out consideration cannot exceed the maximum earn-out consideration of $29.5 million. The MIP is a retention plan for the VoiceBase employees payable in two installments; 50% after the Company shares are registered with the SEC and 50% after January 1, 2022, but no later than March 15, 2022.

As part of the acquisition, we also assumed the VoiceBase Stock Plan and the outstanding vested and unvested options to purchase shares of common stock of VoiceBase thereunder, and such options become exercisable to purchase shares of LivePerson’s common stock, subject to appropriate adjustments to the number of shares and the exercise price of each such option. In connection with the above, we registered 16,322,217 vested shares and 5,167,530 unvested shares under the VoiceBase Stock Plan.

We estimated the fair value of the aforementioned vested and unvested options at the completion of the acquisition at $5.9 million. Of the total consideration, $4.5 million was allocated to the purchase price, $0.8 million was accelerated and expensed immediately following the closing, and $0.7 million was allocated to future services and will be expensed over the remaining requisite service periods. Vesting schedules vary based on the VoiceBase Stock Plan. The estimated fair value of the stock options was determined using the Black-Scholes option pricing model. The share conversion ratio of 0.0091 was applied to convert VoiceBase’s outstanding stock awards into shares of LivePerson’s common stock.

The purchase price allocation resulted in approximately $81.3 million of goodwill and $28.8 million of intangible assets. The goodwill will not be deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. A deferred tax liability for the identified intangibles has been recorded.


	VoiceBase, Inc. Acquisition
	(In thousands)
Assets acquired
Cash	$	2,367
Other current assets	611
Intangible assets	28,810
Other assets	56
Assets acquired	$	31,844
Liabilities assumed
Current liabilities assumed	$	(1,473)
Deferred tax liabilities	(267)
Total liabilities assumed	$	(1,740)
Net assets acquired	30,104
Total acquisition consideration	111,369
Goodwill	$	81,265

The Company applied a multi-period excess earnings method of the income approach to estimate the fair values of the intangible assets acquired. The intangible assets acquired in the business acquisition were developed technology, customer relationships, and trademark for the fair value of $28.8 million, determined based on the estimated fair value of expected after-tax cash flows attributable to annual recurring revenue from enterprise and API customers. The Company applied various estimates and assumptions with respect to forecasted revenue growth rates, the revenue attributable to the existing customers over time and the discount rate. The fair values assigned to the other tangible and identifiable intangible assets acquired and liabilities assumed as part of the business combination were based on management’s estimates and assumptions. The Company began amortizing the customer relationships on the date of acquisition over a period of five years based on expected future cash flow attributable to existing customers. The amortization expense is recorded to amortization of purchased intangibles in the consolidated statements of operations.

In October 2021, the Company acquired Callinize Inc., dba Tenfold, a leading customer experience integration platform operating in the United States. Tenfold was built to integrate the world’s leading communication service providers with the leading CRM and support systems. The purchase price was $112.2 million. This acquisition is accounted for as a part of the Company’s Business segment. This transaction was accounted for as a business combination. The purchase price consisted of approximately $56.9 million in cash, $42.0 million in shares of common stock of the Company, potential earn-out consideration of up to $6.9 million in common stock of the Company, which is based on achieving certain objectives and milestones and is included as part of the purchase price, and replacement options of $6.4 million, which means an option granted by LivePerson to purchase its common stock granted under the Callinize Inc. dba Tenfold 2015 Stock Plan, as amended most recently as of June 26, 2019 (the “Tenfold Stock Plan”), whether vested or unvested. The current fair value of the earn-out is $10.1 million, of which $3.1 million payable in common stock of the Company is being treated as compensation expense over the next two years. The earn-out consideration cannot exceed the maximum earn-out consideration of $14.3 million.

As part of the acquisition, the Company also assumed the Tenfold Stock Plan and the outstanding vested and unvested options to purchase shares of common stock of Tenfold thereunder, and such options become exercisable to purchase shares of LivePerson’s common stock, subject to appropriate adjustments to the number of shares and the exercise price of each such option. In connection with the above, we registered 60,082,513 vested shares and 42,964,711 unvested shares under the Tenfold Stock Plan.

We estimated the fair value of the aforementioned vested and unvested options at the completion of the acquisition at $31.5 million. Of the total consideration, $13.5 million was allocated to the purchase price (with $7.1 million of this paid in cash instead of shares), $4.0 million was related to earn-outs and escrow that were held back, $2.4 million was accelerated and expensed immediately following the closing, and $11.6 million was allocated to future services and will be expensed over the remaining requisite service periods of approximately four years on a straight-line basis. The estimated fair value of the stock options was determined using the Black-Scholes option pricing model. The share conversion ratio of 0.0055 was applied to convert Tenfold’s outstanding stock awards into shares of LivePerson’s common stock.

The purchase price allocation resulted in approximately $71.8 million of goodwill and $41.2 million of intangible assets. The goodwill will not be deductible for tax purposes. The intangible assets are being amortized over their expected period of benefit. A deferred tax liability for the identified intangibles has been recorded.


	Tenfold Acquisition
	(In thousands)
Assets acquired
Cash	$	3,770
Other current assets	2,339
Intangible assets	41,150
Other assets	1,144
Assets acquired	$	48,403
Liabilities assumed
Current liabilities assumed	$	(1,470)
Long-term liabilities assumed	(3,524)
Deferred tax liabilities, non-current	(3,005)
Liabilities assumed	$	(7,999)
Net assets acquired	40,404
Total acquisition consideration	112,187
Goodwill	$	71,783

The Company applied a multi-period excess earnings method of the income approach to estimate the fair values of the intangible assets acquired. The intangible assets acquired in the business acquisition were developed technology, customer relationships, and trademark for the fair value of $41.2 million, determined based on the estimated fair value of expected after-tax cash flows attributable to annual recurring revenue from commercial, enterprise, and partner customer segments. The Company applied various estimates and assumptions with respect to forecasted revenue growth rates, the revenue attributable to the existing customers over time and the discount rate. The fair values assigned to the other tangible and identifiable intangible assets acquired and liabilities assumed as part of the business combination were based on management’s estimates and assumptions. The Company began amortizing the customer relationships on the date of acquisition over a period of 15 years based on expected future cash flow attributable to existing customers. The amortization expense is recorded to amortization of purchased intangibles in the consolidated statements of operations.

The following unaudited pro forma information presents the combined results of operations as if the acquisitions of e-bot7, VoiceBase, and Tenfold had been completed as of the beginning of the Company’s fiscal year 2020. The unaudited pro forma results include adjustments primarily related to the amortization of intangible assets and the inclusion of acquisition costs as of the earliest period presented. There were no transactions between the Company and the acquired companies during the periods presented that would need to be eliminated.

The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies, or the effect of the incremental costs incurred from integrating these companies. For pro forma purposes, 2021 earnings were adjusted to exclude acquisition-related costs, and 2020 earnings were adjusted to include these costs. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations.