On September 29, 2022, the Company acquired 100% of the equity of Eleviant for approximately $19.0 million, including $17.4 million of cash on hand. In addition to the cash payment, Eleviant owners and executives were issued 173,802 shares of common stock valued at $1.2 million, and 200,000 stock options from the 2020 Equity Award Plan at the date of acquisition, valued at $0.4 million.

The U.S.-based Eleviant is a provider of digital transformation services and solutions, and is headquartered in Dallas, TX, with operations in Chennai and Coimbatore, India. Eleviant’s offerings support the new ways enterprises work, communicate, and scale today and focus on cloud, application modernization, mobile, artificial intelligence (AI), machine learning (ML), and robotic process automization (RPA). Eleviant’s services are supported by a portfolio of solutions, including PeopleOne, a Digital Workplace platform for employee engagement, communication, and collaboration; vChat, a chatbot builder platform; and vBots, an RPA builder platform. The acquisition is expected to aid CTG in accelerating the growth of digital solutions sales to clients in the Americas and Europe and create new points of entry with proven technology services and solutions.

An earn-out of $5.0 million can be earned, a portion of which will be payable in each period subject to the achievement of revenue and gross profit targets for fiscal 2022, 2023 and 2024. Additionally, for each $10,000 of gross profit or revenue achieved above the targets, an additional $2,000 can be earned, with no maximum limit. There is no payout if the achievement is below the target threshold. However, in subsequent years, if the preceding year’s targets were not met, an earn-out can be earned for both years if the combined total for gross profit or revenue for the two years exceeds the combined two-year targets. The fair value as of the September 29, 2022 acquisition date was $4.0 million. The fair value of the remaining contingent consideration liability was determined to be approximately $3.1 million as of June 30, 2023. Approximately $1.6 million and $1.5 million of the remaining contingent consideration liabilities is recorded in "Other current liabilities" and "Other long-term liabilities", respectively, on the consolidated balance sheet as of June 30, 2023. The Company made a payment of $0.9 million related to the earn-out based upon achievement by Eleviant of revenue and gross profit targets for the 2022 fiscal year in the 2023 second quarter.

The acquisition fair value of the consideration for the acquisition of Eleviant consisted of the following as of September 29, 2022:


(amounts in thousands)
Cash consideration	$	17,382
Share issuance		1,178
Stock option issuance - 3 month vest		166
Stock option issuance - 12 month vest		225
Working capital adjustment		(82	)
Fair value of contingent consideration		4,000
Fair value of purchase consideration	$	22,869

The following table summarizes the preliminary allocation of the aggregate purchase price consideration to the fair value of the assets acquired and liabilities assumed as of September 29, 2022:


(amounts in thousands)
Assets Acquired:
Cash	$	755
Accounts receivable		1,605
Prepaids and other current assets		178
Property and equipment, net		437
Taxes receivable		48
Acquired intangibles		7,250
Goodwill		17,357
Total assets acquired	$	27,630

Liabilities Assumed:
Accounts payable	$	492
Short-term debt		601
Accrued compensation		355
Other current liabilities		205
Long-term debt		982
Deferred compensation benefits		324
Deferred tax liability		1,802
Total liabilities assumed	$	4,761
Net assets acquired	$	22,869

The Company allocated value to current assets and liabilities based on book values at September 29, 2022, which approximates fair value. The excess consideration was recorded as goodwill, which is not deductible for income tax purposes, and is driven by Eleviant providing a high level of digital IT solutions and offshore delivery capabilities.

The intangible assets acquired in this acquisition consisted of the following:


(amounts in thousands)	Fair Value		Estimated Useful Life
Technology	$	550	10 years
Customer relationships		6,700	10 years
Fair value of purchase consideration	$	7,250

The Company incurred acquisition-related expenses related to retention bonuses and amortization of intangible assets of approximately $0.3 million and $0.7 million in the quarter and year-to-date period ended June 30, 2023, respectively, which were recorded as a component of selling, general, and administrative expenses in the consolidated statements of income. The accounting for this acquisition was updated in the first quarter of 2023, including a working capital adjustment of $0.1 million, but the preliminary purchase accounting for intangible assets has not yet been finalized as of June 30, 2023.