ACQUISITIONS

Continuum — On March 15, 2018, the Company acquired all of the outstanding equity of Continuum Innovation LLC together with its subsidiaries (“Continuum”) to enhance the Company’s consulting capabilities as well as its digital and service design practices. Continuum, headquartered in Boston with offices located in Milan, Seoul, and Shanghai, focuses on four practices including strategy, physical and digital design, technology and its Made Real Lab. The acquisition of Continuum added approximately 125 design consultants to the Company’s headcount.

In connection with the Continuum acquisition, the Company paid $52,515 as cash consideration, of which $5,410 was placed in escrow for a period of 9 to 15 months as security for the indemnification obligations of the sellers under the terms of the equity purchase agreement. Furthermore, subject to attainment of specified performance targets in the 12 months after the acquisition, the Company will make a cash earnout payment with a maximum amount payable of $3,135. The Company recorded $2,400 related to this earnout payment as contingent consideration as of the acquisition date. During the third quarter of 2018, the Company recorded a $900 reduction to the fair value of the contingent consideration , which is included in Interest and other income, net in the consolidated statement of income and comprehensive income (Note 11 “Fair Value Measurements”).

Think — On November 1, 2018, the Company acquired all of the equity interests of Think Limited (“Think”), a digital transformation agency headquartered in London, UK. This acquisition is intended to strengthen EPAM’s digital and organizational consulting capabilities in the UK and Western European markets and enhance the Company’s global product and design offerings.

In connection with the Think acquisition, the Company paid $26,254 of cash, of which $3,237 was placed in escrow for a period of 12 months as security for the indemnification obligations of the sellers under the terms of the equity purchase agreement. Furthermore, subject to attainment of specified performance targets in the 12 months after the acquisition, the Company will make a cash earnout payment with a maximum amount payable of $8,156. The Company recorded $5,990 related to this earnout payment as contingent consideration as of the acquisition date.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the dates of acquisition as updated for any changes as of December 31, 2018:



	Continuum		Think
	As of March 15, 2018		As of November 1, 2018
Cash and cash equivalents	$	2,251	$	2,344
Accounts receivable	6,676		2,259
Unbilled revenues	2,463		284
Prepaid and other current assets	936		609
Goodwill	26,617		22,482
Intangible assets	14,450		6,882
Property and equipment and other noncurrent assets	8,902		642
Total assets acquired	$	62,295	$	35,502
Accounts payable, accrued expenses and other current liabilities	$	2,745	$	2,205
Due to employees	1,001		13
Long-term debt (Note 8)	3,220		—
Other noncurrent liabilities	490		1,040
Total liabilities assumed	$	7,456	$	3,258
Net assets acquired	$	54,839	$	32,244

The above estimated fair values of the assets acquired and liabilities assumed are provisional and based on the information that was available as of the acquisition date and updated for any changes as of December 31, 2018. The Company expects to complete the purchase price allocations as soon as practicable but no later than one year from the respective acquisition dates.

As of December 31, 2018, the Company finalized the valuation of intangible assets acquired in connection with the acquisition of Continuum which resulted in an adjustment of initially recognized intangible assets and their useful lives as well as in recognition of an additional intangible asset in the form of a favorable lease. The Company removed a liability associated with an initially recognized unfavorable lease, which was classified as other noncurrent liabilities. The Company also finalized a working capital adjustment that resulted in a partial release of escrow cash in the amount of $76 to the Company. These adjustments as well as the revaluation of contingent consideration resulted in a corresponding decrease in the value of acquired goodwill.

The following table presents the estimated fair values and useful lives of intangible assets acquired during the year ended December 31, 2018:



	Continuum			Think
	Weighted Average Useful Life (in years)	Amount		Weighted Average Useful Life (in years)	Amount
Customer relationships	6.5	$	5,800	7	$	6,117
Favorable lease	11.2	5,500		—	—
Contract royalties	8	1,900		—	—
Trade names	5	1,250		5	765
Total		$	14,450		$	6,882

The goodwill recognized as a result of the acquisitions is attributable primarily to strategic and synergistic opportunities related to the consulting and design businesses, the assembled workforces acquired and other factors. The goodwill acquired as a result of the Continuum acquisition is expected to be deductible for income tax purposes while the goodwill acquired as a result of the Think acquisition is not expected to be deductible for income tax purposes.

Revenues generated by Continuum and Think totaled $26,300 and $1,908, respectively for the year ended December 31, 2018. Pro forma results of operations have not been presented because the effect of the Continuum and Think acquisitions on the Company’s consolidated financial statements was not material individually or in the aggregate.

During the years ended December 31, 2017 and 2016, the Company completed acquisitions with aggregated purchase prices of $6,980 and $5,580, respectively. These acquisitions individually and in the aggregate are not material to the Company’s consolidated financial statements.