Business Combinations

Fiscal 2018 Acquisitions

During fiscal 2018, the Company completed several acquisitions with aggregate cash consideration of $637.0 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 consolidated statements of operations. The Company funded these acquisitions with cash.

Acquisition of Black Duck Software (Black Duck)

On December 11, 2017, the Company acquired 100% of the outstanding shares of Black Duck, a privately-held leader in automated solutions for securing and managing open source software, for $565.1 million total purchase consideration.

As of October 31, 2018, the total purchase consideration and the purchase allocation was as follows:



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

Goodwill	$	395,395
Identifiable intangibles assets acquired	178,000
Cash, cash equivalents and short-term investments	19,491
Other tangible liabilities acquired, net	(12,298		)
Deferred revenue	(15,500		)
Total purchase allocation	$	565,088

Goodwill of $395.4 million is primarily attributable to the assembled workforce and expectation of sales growth due to the Company's new technology offerings in the security, quality and compliance testing space. The goodwill 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, except for in-process research and development project not yet completed, 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 $15.5 million, including compensation expenses, professional fees and other direct expenses, were expensed as incurred in the consolidated statement of operations during fiscal year 2018. The Company funded the acquisition with cash of $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 RSU and stock options 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 fiscal 2018, the Company completed other acquisitions for a total purchase consideration of $93.0 million, net of cash acquired. The Company does not consider these acquisitions to be material to the Company’s consolidated financial statements. The preliminary purchase allocations resulted in $47.6 million of goodwill, which is not deductible for tax purposes, and $51.9 million of acquired identifiable intangible assets valued using the income or cost methods. The intangible assets, except for in-process research and development projects not yet completed, are being amortized over their respective useful lives ranging from one to seven years. The acquisition-related costs for these acquisitions, totaling $3.8 million, were expensed as incurred in the consolidated statement of operations.