Acquisitions (Notes)

12 Months Ended

Dec. 31, 2023

There were no acquisitions during the year ended December 31, 2023.

2022 Acquisition

Hardent, Inc.

On May 20, 2022, (the “Closing Date”), the Company completed its acquisition of Hardent, a leading electronic design company, by acquiring all of its outstanding shares. The Company acquired Hardent for a total consideration of approximately $16.1 million, which consisted of $14.7 million in initial cash consideration paid at the Closing Date, $1.2 million deposited into an escrow account to fund indemnification obligations to be released within 18 months after the Closing Date and $0.2 million deposited into an escrow account to fund other contractual provisions related to certain working capital adjustments. The addition of the technology and expertise from Hardent augments the Company’s CXL memory interconnect initiative.

As part of the acquisition, the Company agreed to pay certain Hardent employees approximately $1.2 million in cash over three years following the Closing Date (the “Retention Bonus”), to be paid in three equal installments on each of the dates that were 12 months, 24 months and 36 months following the Closing Date. The Retention Bonus payouts are subject to the condition of continued employment, therefore the Retention Bonus payouts will be treated as compensation and will be expensed ratably over the retention period.

As of December 31, 2022, the Company had incurred approximately $1.2 million in external acquisition costs in connection with the transaction, which were expensed as incurred.

The fair value of the intangible assets acquired was determined by management primarily by using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the existing technologies less charges representing the contribution of other assets to those cash flows. The fair values of the remaining assets acquired and liabilities assumed approximated their carrying values at the Closing Date. The Company performed a valuation of the net assets acquired as of the Closing Date.

The total consideration from the acquisition was allocated as of the Closing Date and reflects adjustments made during the measurement period to finalize the purchase price accounting, as follows:


(In thousands)	Total
Cash and cash equivalents	$	209

Accounts receivable	1,088
Unbilled receivables	239

Prepaid expenses and other current assets	16
Identified intangible assets	5,000

Goodwill	12,069



Accounts payable	(55)

Deferred revenue	(578)
Income taxes payable	(466)

Deferred tax liability	(1,325)
Other current liabilities	(56)
Total	$	16,141

The goodwill arising from the acquisition was primarily attributed to synergies related to the combination of new and complementary technologies of the Company and the assembled workforce of the acquired business. This goodwill was not deductible for tax purposes.

The identified intangible assets assumed in the acquisition of Hardent were recognized as follows based upon their estimated fair values as of the acquisition date:


	Total		Estimated Weighted-Average Useful Life
	(in thousands)		(in years)
Existing technology	$	4,800	5 years
Customer contracts and contractual relationships	200		2 years


Total	$	5,000

Unaudited Pro Forma Combined Consolidated Financial Information

The following pro forma financial information presents the combined results of operations for the Company and Hardent as if the acquisition had occurred on January 1, 2021. The pro forma financial information was prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisition actually taken place on January 1, 2021, and should not be taken as indicative of future consolidated operating results. Additionally, the pro forma financial results do not include any anticipated synergies or other expected benefits from the acquisition:


	Years Ended December 31,
(In thousands)	2022		2021
	(unaudited)
Total revenue	$	457,852	$	336,258
Net income (loss)	$	(13,251)	$	19,452

The pro forma net loss for 2022 was adjusted to exclude $1.2 million of acquisition-related costs incurred during the year ended December 31, 2023. Consequently, the pro forma net income for 2021 was adjusted to include these costs.

2021 Acquisitions

AnalogX Inc.

On July 2, 2021 (the “AnalogX Closing Date”), the Company completed its acquisition of AnalogX, a premier interconnect IP company, by acquiring all of its outstanding shares. The Company acquired AnalogX for total consideration of approximately $47.5 million, including certain adjustments for working capital, which consisted of $40.4 million in initial cash consideration at the AnalogX Closing Date and additional deferred payments totaling approximately $7.4 million, initially recorded at its present value of approximately $7.1 million, (the “Deferred Payments”). The Deferred Payments will be paid in cash over three years following the AnalogX Closing Date, in three installments on each of the dates that are 12 months, 24 months and 36 months following the AnalogX Closing Date. A portion of the purchase price, $5.9 million of the consideration, was deposited into an escrow account to fund indemnification obligations and other contractual provisions, to be released 12 months after the AnalogX Closing Date. The addition of the technology and expertise from AnalogX augments the Company’s SerDes offerings and CXL memory interconnect initiative.

As part of the acquisition, the Company agreed to pay certain AnalogX employees $3.5 million in cash over three years following the AnalogX Closing Date (the “AnalogX Retention Bonus”), to be paid in three equal installments on each of the dates that are 12 months, 24 months and 36 months following the AnalogX Closing Date. The AnalogX Retention Bonus payouts are subject to the condition of continued employment. Therefore, the AnalogX Retention Bonus payouts will be treated as compensation and will be expensed ratably over the retention period.

As of December 31, 2021, the Company had incurred approximately $0.8 million in external acquisition costs in connection with the transaction, which were expensed as incurred.

The fair value of the intangible assets acquired was determined by management primarily by using the estimated current replacement cost under the cost approach. The fair values of the remaining assets acquired and liabilities assumed approximated their carrying values at the AnalogX Closing Date. The Company performed a valuation of the net assets acquired as of the AnalogX Closing Date.

The total consideration from the business combination was allocated as of the Closing Date and reflects adjustments made through the measurement period to finalize the purchase price accounting, as follows:


(In thousands)	Total
Cash and cash equivalents	$	2,763
Accounts receivable	280
Unbilled receivables	1,566
Prepaid expenses and other current assets	1,354
Identified intangible assets	6,800
IPR&D	3,800
Goodwill	39,309
Property, plant and equipment, net	118

Accounts payable	(1,112)
Deferred revenue	(23)
Income taxes payable	(7,127)

Other current liabilities	(215)
Total	$	47,513

The identified intangible assets assumed in the acquisition of AnalogX were recognized as follows based upon their estimated fair values as of the acquisition date:


	Total		Estimated Weighted-Average Useful Life
	(in thousands)		(in years)
Existing technology	$	6,300	5 years
Customer contracts and contractual relationships	500		2 years

IPR&D	3,800		Not applicable
Total	$	10,600

IPR&D consisted of multiple projects relating to the development of various high-speed SerDes technologies. The projects were expected to be completed within the subsequent three years. In the third quarter of 2023, the Company disposed the $3.8 million related to the AnalogX IPR&D in connection with the divestiture of the Company’s PHY IP group. Refer to Note 20, “Divestiture,” for additional information.

PLDA Group

On June 16, 2021, the Company announced that it had entered into an agreement to acquire PLDA, a provider of high-speed interconnect solutions. On August 18, 2021 (the “PLDA Closing Date”), the Company completed its acquisition of PLDA by acquiring all of its outstanding shares. Under the terms of the Share Purchase Agreement, the total consideration of approximately $85.6 million was comprised of $67.1 million in closing cash consideration, 0.3 million shares of the Company’s common stock (valued based on the Company’s closing stock price at the PLDA Closing Date, which amounted to approximately $6.9 million) and up to an additional $21.0 million to be paid in shares of common stock, valued at $16.9 million as of the acquisition date (the “fair value of the earn-out liability”), subject to certain revenue targets of the acquired business for the subsequent three years. The fair value of the earn-out liability will be remeasured each quarter, depending on the acquired business’s revenue performance relative to target over the applicable period. The Company classified its liability for the contingent earn-out consideration related to the PLDA acquisition within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs. A portion of the purchase price, $10.0 million of the consideration, was deposited into an escrow account to fund indemnification obligations and other contractual provisions, to be released 24 months after the PLDA Closing Date. The addition of the technology and expertise from PLDA augments the Company’s digital controller IP and CXL memory interconnect initiative.

As part of the acquisition, the Company agreed to pay certain PLDA employees $3.0 million in cash over three years following the PLDA Closing Date (the “PLDA Retention Bonus”), to be paid in three equal installments on each of the dates that were 12 months, 24 months and 36 months following the PLDA Closing Date. The PLDA Retention Bonus payouts are subject to the condition of continued employment. Therefore, the PLDA Retention Bonus payouts will be treated as compensation and expensed ratably over the retention period.

As of December 31, 2021, the Company had incurred approximately $1.4 million in external acquisition costs in connection with the transaction, which were expensed as incurred.

flows. The fair values of the remaining assets acquired and liabilities assumed approximated their carrying values at the PLDA Closing Date. The Company performed a valuation of the net assets acquired as of the PLDA Closing Date.

The total consideration from the business combination was allocated as of the Closing Date as follows:


(In thousands)	Total
Cash and cash equivalents	$	5,820

Accounts receivable	2,233
Inventories	125
Prepaid expenses and other current assets	836

Identified intangible assets	21,400
IPR&D	7,400
Goodwill	57,543
Property, plant and equipment, net	679
Operating lease right-of-use asset	864
Other assets	339
Accounts payable	(1,046)
Accrued salaries and benefits	(814)
Deferred revenue	(514)
Income taxes payable	(118)
Operating lease liability	(852)
Deferred tax liability	(8,180)
Other current liabilities	(74)
Total	$	85,641

The identified intangible assets assumed in the acquisition of PLDA were recognized as follows based upon their estimated fair values as of the acquisition date:


	Total		Estimated Weighted-Average Useful Life
	(in thousands)		(in years)
Existing technology	$	20,400	3 to 5 years
Customer contracts and contractual relationships	1,000		2 years

IPR&D	7,400		Not applicable
Total	$	28,800

IPR&D consisted of multiple projects relating to the development of PLDA’s PCIe Gen 6 and CXL 3.0 technologies. The projects are expected to be completed within 36 months from the date of acquisition. The acquired IPR&D will not be amortized until completion of the related products which are determined by when the underlying project reaches technological feasibility and commences commercial production. Upon completion, the IPR&D projects will be amortized over their respective useful lives, which are expected to range between three years and five years.

Unaudited Pro Forma Combined Consolidated Financial Information

The following pro forma financial information presents the combined results of operations for the Company and AnalogX and PLDA as if the acquisitions had occurred on January 1, 2020. The pro forma financial information was prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the acquisitions actually taken place on January 1, 2020, and should not be taken as indicative of future consolidated

operating results. Additionally, the pro forma financial results do not include any anticipated synergies or other expected benefits from the acquisitions:



(In thousands)	For the Year Ended December 31, 2021
	(unaudited)
Total revenue	$	338,961
Net income	$	16,533

The pro forma net income for 2021 was adjusted to exclude $2.2 million of acquisition-related costs incurred in 2021.