Business Combinations

During the six months ended April 30, 2018, the Company completed several acquisitions with aggregate cash consideration of $631.1 million, net of cash, cash equivalents and short-term investments acquired. The Company does not consider these acquisitions to be material, individually or in the aggregate, to the Company’s unaudited condensed consolidated statements of operations.

Acquisition of Black Duck Software (Black Duck)

On December 11, 2017, the Company acquired Black Duck, a privately-held leader in automated solutions for securing and managing open source software, for $565.1 million total purchase consideration. With this acquisition, the Company has acquired industry-leading products which automate the process of identifying and inventorying the open source codes, detecting known security vulnerabilities and license compliance issues.

As of April 30, 2018, the total purchase consideration and the preliminary purchase price allocation were as follows:



	(in thousands)
Cash paid	$	563,500
Fair value of assumed equity awards allocated to purchase consideration	1,588
Total consideration	$	565,088

Goodwill	$	396,346
Identifiable intangibles assets acquired	178,000
Cash, cash equivalents and short-term investments	19,491
Other tangible liabilities acquired, net	(13,249		)
Deferred revenue	(15,500		)
Total purchase allocation	$	565,088

The preliminary goodwill of $396.3 million is not deductible for tax purposes. The acquired identifiable intangible assets of $178.0 million were valued using the income or cost methods. The intangible assets are being amortized over their respective useful lives ranging from one to ten years. The acquisition-related costs directly attributable to the business combination of $1.9 million and $13.5 million, including compensation expenses, professional fees and other direct expenses, were expensed as incurred in the unaudited condensed consolidated statement of operations for the three and six months ended April 30, 2018, respectively. The Company funded the acquisition with cash. The cash consideration was $544.0 million, net of acquired cash, cash equivalents and short-term investments.

The Company also assumed unvested restricted stock units (RSUs) and stock options with a fair value of $15.6 million. The Black-Scholes option-pricing model was used to determine the fair value of these stock options, whereas the fair value of the RSUs was based on the market price on the grant date of the instruments. Of the total fair value of the equity awards assumed, $1.6 million was allocated to the purchase consideration and $14.0 million was allocated to future services to be expensed over their remaining service periods on a straight-line basis.

Other Fiscal 2018 Acquisitions

During the six months ended April 30, 2018, the Company completed other acquisitions for a total purchase consideration of $87.1 million, net of cash acquired. The Company does not consider these acquisitions to be material to the Company’s unaudited condensed consolidated financial statements. The preliminary purchase price allocations resulted in $38.4 million of goodwill, which is not deductible for tax purposes, and $50.2 million of acquired identifiable intangible assets valued using the income or cost methods. The intangible assets are being amortized over their respective useful lives ranging from one to seven years. The acquisition-related costs for these acquisitions, totaling $3.3 million, were expensed as incurred in the unaudited condensed consolidated statement of operations. The Company funded these acquisitions with cash.

The preliminary fair value estimates for the assets acquired and liabilities assumed for all acquisitions completed within 12 months from the applicable acquisition date are not yet finalized and may change as additional information becomes available during the respective measurement periods. The primary areas of those preliminary estimates relate to certain tangible assets and liabilities, identifiable intangible assets, and income taxes. Additional information, which existed as of the respective acquisition dates but is yet unknown to the Company, may become known to the Company during the remainder of the respective measurement periods, a period not to exceed 12 months from the applicable acquisition date. Changes to the provisional amounts recorded as assets or liabilities during a measurement period may result in an adjustment to goodwill.