Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Complex Networks Acquisition

On December 3, 2021, in conjunction with the Business Combination, the Company completed the acquisition of 100% of the members’ interests of Complex Networks, a publisher of online media content targeting Millennial and Gen Z consumers (the “Complex Networks Acquisition”).

The following table summarizes the fair value of consideration exchanged as a result of the Complex Networks Acquisition:


Cash consideration(1)	$	197,966
Share consideration(2)	96,200
Total consideration	$	294,166

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(1)Includes the cash purchase price of $200.0 million adjusted for certain closing specified liabilities as specified in the Complex Networks Acquisition purchase agreement.

(2)Represents 10,000,000 shares of our Class A common stock at a price of $9.62 per share, which is based on the closing stock price of our Class A common stock on the date on which the Business Combination was consummated.

The following table summarizes the determination of the fair value of identifiable assets acquired and liabilities assumed in connection with the Complex Networks Acquisition. During the year ended December 31, 2022, the Company finalized the fair value of assets acquired and liabilities assumed. Measurement period adjustments were reflected during the year ended December 31, 2022, which is the period in which the adjustments occurred. The adjustments resulted from new information obtained about facts and circumstances that existed as of the acquisition date.


	Preliminary		Measurement Period Adjustments		Final
Cash	$	2,881	—		$	2,881
Accounts receivable	22,581		11		22,592
Prepaid and other current assets	17,827		281		18,108
Property and equipment	332		(15)		317
Intangible assets	119,100		—		119,100
Goodwill	189,391		(909)		188,482
Accounts payable	(2,661)		—		(2,661)
Accrued expenses	(12,319)		(803)		(13,122)
Accrued compensation	(12,867)		349		(12,518)
Deferred revenue	(5,855)		(48)		(5,903)
Deferred tax liabilities	(22,776)		1,134		(21,642)
Other liabilities	(1,468)		—		(1,468)
Total consideration for Complex Networks	$	294,166	$	—	$	294,166

The table below indicates the estimated fair value of each of the identifiable intangible assets:


	Asset Fair Value	Weighted Average Useful Life (Years)
Trademarks & tradenames	97,000	15
Customer relationships	17,000	4
Developed technology	5,100	3

The fair values of the intangible assets were estimated using Level 3 inputs. The fair value of trademarks and trade names was determined using the relief from royalty method, the fair value of customer relationships was determined using the multi-period excess earnings approach, and the fair value of acquired technology was determined using the replacement cost approach. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired resulted in $188.5 million of goodwill, which is primarily attributed to workforce and synergies, and is not deductible for tax purposes.

Goodwill Impairment

The Company reviews goodwill for impairment annually as of October 1 and more frequently if events or changes in circumstances indicate an impairment may exist (a “triggering event”). As of September 30, 2023, the Company had $91.6 million of goodwill recorded on its condensed consolidated balance sheet. During the year ended December 31, 2022, the Company recorded a $102.3 million non-cash goodwill impairment charge driven by a sustained decline in share price that pushed our market capitalization below the carrying value of our stockholders’ equity.

During the three months ended September 30, 2023, the Company identified a further sustained decline in share price whereby the Company’s market capitalization was below the carrying value of its stockholders’ equity. The Company concluded the sustained decline in share price was a triggering event and proceeded with a quantitative goodwill impairment assessment. The quantitative impairment assessment was performed as of September 30, 2023, utilizing an equal weighting of the income and market approaches. The analysis required the comparison of the Company’s carrying value with its fair value, with an impairment recorded for any excess of carrying value over the fair value. The discounted cash flow method was used to determine the fair value of the Company’s single reporting unit under the income approach. The adjusted market capitalization method was used to determine the fair value of the reporting unit under the market approach. The adjusted market capitalization method is calculated by multiplying the average share price of the Company’s common stock for the average between (i) the singular day of September 30, (ii) seven days prior to the measurement date, and (iii) 30 days prior to the measurement date, by the number of outstanding shares of common stock and adding a control premium that reflects the premium a hypothetical buyer might pay. The control premium was estimated using historical transactions over three years. The results of the quantitative analysis performed indicated the fair value of the reporting unit exceeded the carrying value by more than 10%. As a result, the Company concluded there was no goodwill impairment as of September 30, 2023. The Company believes our procedures for determining fair value are reasonable and consistent with current market conditions as of September 30, 2023.