In September 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with RapidMiner, Inc., a Delaware corporation (“RapidMiner”), and a wholly-owned subsidiary of the Company (“Merger Sub”). RapidMiner's low-code platform is used to develop production-scale data pipelines and ML model. It provides drag-and-drop building blocks to transform and augment data. The acquisition of RapidMiner adds to the Company’s end-to-end data analytics portfolio.

Pursuant to the Merger Agreement, the Company acquired 100% of the outstanding capital stock of RapidMiner and completed the acquisition of RapidMiner through the merger of the Merger Sub with and into RapidMiner, with RapidMiner surviving as a wholly-owned subsidiary of the Company.

The preliminary aggregate merger consideration was $98.6 million in cash, subject to customary working capital arrangements. The Company financed the acquisition with cash on hand.

The acquisition of RapidMiner has been accounted for as a business combination under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their estimated fair value as of the acquisition date. The following table summarizes the preliminary purchase consideration transferred to acquire RapidMiner and the amounts of identified assets acquired and liabilities assumed at the acquisition date (in thousands):


Fair value of consideration transferred	$	98,594
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash		3,530
Accounts receivable		3,548
Other assets		3,088
Deferred tax assets		782
Trade names (7-year life)		802
Developed technology (5-year life)		8,884
Customer relationships (7-year life)		5,711
Accounts payable and other liabilities		(2,844	)
Deferred revenue		(1,584	)
Total net identifiable assets acquired and liabilities assumed		21,917
Goodwill (1)	$	76,677

(1)

Goodwill is primarily attributable to market synergies expected to arise after the acquisition and is not deductible for tax purposes. All goodwill is recorded in the Software segment.

The primary areas that remain preliminary relate to the fair value of intangible assets acquired, certain tangible assets and liabilities acquired, income taxes and residual goodwill. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

In June 2022, the Company entered into a stock purchase agreement and simultaneously acquired 100% of the outstanding capital stock of Concept Engineering, a leading provider of electronic system visualization software that accelerates the development, manufacture, and service of complex electrical and electronic systems, for preliminary aggregate consideration of $25.3 million. The Company financed the acquisition with cash on hand. See Note 11 for further information on post-combination stock-based compensation expense related to this acquisition. Concept Engineering’s software will be integrated into Altair’s Electronic System Design suite and will be available via Altair Units.

The acquisition of Concept Engineering has been accounted for as a business combination under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their estimated fair value as of the acquisition date. The following table summarizes the preliminary purchase consideration transferred to acquire Concept Engineering and the amounts of identified assets acquired and liabilities assumed at the acquisition date (in thousands):


Fair value of consideration transferred	$	25,325
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash	$	2,468
Accounts receivable		1,552
Other assets		418
Developed technology (4-year life)		7,620
Customer relationships (7-year life)		3,315
Accounts payable and other liabilities		(393	)
Deferred revenue		(624	)
Deferred tax liabilities and other tax reserves		(3,919	)
Total net identifiable assets acquired and liabilities assumed		10,437
Goodwill (1)	$	14,888

(1)

Goodwill is primarily attributable to market synergies expected to arise after the acquisition and is not deductible for tax purposes. All goodwill is recorded in the Software segment.

During the year ended December 31, 2022, the Company completed three other business acquisitions that were accounted for as business combinations under the acquisition method. The preliminary transaction consideration of $18.0 million was allocated to assets acquired and liabilities assumed at their estimated fair values. The allocation included $11.6 million to developed technology, $2.7 million to customer relationships, $(0.9) million to net liabilities acquired and $4.6 million to goodwill, of which approximately $3.2 million is deductible for tax purposes. All goodwill is recorded in the Software segment. The Company expects to finalize the valuations as soon as practicable, but not later than one year from the acquisition dates. These acquisitions were financed with cash on hand. The operating results of each acquisition have been included in the consolidated financial statements since the respective dates of acquisition. The Company’s transaction costs related to its 2022 acquisitions were not material.

In December 2021, the Company acquired all of the outstanding capital stock of two related privately held companies, World Programming Limited and December 2015 Software Limited (together “World Programming”), from the stockholders named therein, for aggregate consideration of $73.2 million. The consideration consisted of cash in the amount of $50.0 million, subject to a customary working capital adjustment, and contingent consideration of $23.2 million, including $19.7 million of the Company’s Class A Common Stock (the “Contingent Stock Consideration”) and a measurement period adjustment of $3.5 million recognized in 2022. The dates on which the Contingent Stock Consideration is issuable and the number of shares issuable on such dates depend primarily on certain aspects of legal proceedings in which World Programming and SAS Institute, Inc. are engaged. For further information on the legal proceedings see Note 16.

The Company is required to mark-to-market the Contingent Stock Consideration liability based on the trading price of the Company’s Class A Common Stock. For the year ended December 31, 2022, the Company recognized a gain of $7.2 million on the mark-to-market adjustment of contingent consideration, which is included in Other operating income, net in the consolidated statement of operations.

In addition, per the stock purchase agreement, $29.5 million of Class A Common Stock will be issued subject to the continuing employment of certain key employees and are not reflected in aggregate consideration but will be recognized as stock-based compensation over the service period of three years.

The acquisition has been accounted for as a business combination under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their estimated fair value as of the acquisition date, which was finalized in 2022. The following table summarizes the purchase consideration transferred to acquire World Programming and the amounts of identified assets acquired and liabilities assumed at the acquisition date (in thousands):


Fair value of consideration transferred	$	73,243
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash	$	1,895
Accounts receivable		5,656
Other assets		5,756
Property and equipment		2,209
Trade names (4-year life)		300
Developed technology (5-year life)		33,000
Customer relationships (7-year life)		7,000
SAS legal liability		(66,596	)
Accounts payable and other liabilities		(3,401	)
Deferred revenue		(2,737	)
Deferred tax liabilities and other tax reserves		(11,406	)
Total net identifiable assets acquired and liabilities assumed		(28,324	)
Goodwill (1)	$	101,567

(1)

Goodwill is primarily attributable to market synergies expected to arise after the acquisition and is not deductible for tax purposes. All goodwill is recorded in the Software segment.

The allocation of fair value of purchase consideration for the Company’s other 2021 acquisition was finalized during 2022. There were no changes to the preliminary fair value of assets acquired and liabilities assumed, as previously reported.