Business Combinations

12 Months Ended

Dec. 31, 2020

BUSINESS COMBINATIONS

On August 21, 2020, we acquired all of the outstanding shares of Advanced Technical Solutions in Scandinavia AB (“ATS”), a Swedish company focused on 3D digital twin solution technology for a purchase price of €5.1 million ($6.0 million) paid, net of cash acquired, subject to certain additional post-closing adjustments, and up to €1.0 million ($1.2 million) in contingent consideration that may be earned by the former owners if certain product development milestones are met in a three-year period. The U.S. Dollar amounts have been converted from Euros based on the foreign exchange rate in effect on the closing date of the acquisition. We believe this acquisition enables the Company to provide high accuracy 3D digital twin simulations for industries such as automotive and aerospace. The results of ATS’s operations as of and after the date of acquisition have been included in our consolidated financial statements as of December 31, 2020, and for the year ended December 31, 2020.

The acquisition of ATS constitutes a business combinations as defined by ASC Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed were recorded at their fair values on the date of acquisition. The purchase price allocations below represent our finalized determination of the fair value of the assets acquired and liabilities assumed for the acquisition.

Following is a summary of our allocations of the purchase price to the fair values of the assets acquired and liabilities assumed as of the date of the acquisition:


	Fair Value (2)
Tangible assets acquired:
Accounts receivable	$	185
Inventory	312
Other assets	389
Total tangible assets acquired	886

Liabilities assumed:
Accounts payable and accrued liabilities	(355)
Total liabilities assumed	(355)

Intangible assets	1,295
Net assets acquired	1,826

Deferred income tax liability	(277)
Goodwill	5,467
Contingent consideration(1)	(980)
Purchase price paid, net of cash acquired	$	6,036
Contingent consideration(1)	980
Total purchase price	$	7,016

(1) This total consists primarily of the fair value of the projected contingent consideration.

(2) Amounts converted from Euros to U.S. Dollars based on the foreign exchange rate on the closing date of the acquisition.

The goodwill arising from the acquisition consists largely of the expected synergies from combining operations as well as the value of the workforce. This goodwill is not tax deductible. Acquisition and integration costs are not included as components of consideration transferred, but are recorded as expense in the period in which such costs are incurred. To date, we have not incurred any material acquisition or integration costs for the ATS acquisition. Pro forma financial results for ATS has not been presented because the effect of this transaction was not material to our consolidated financial results.

Following are the details of the purchase price allocated to the intangible assets acquired for the ATS acquisition:


	Amount		Weighted Average Life (Years)
Brand	$	33	1
Technology	767		5
Customer relationships	495		10
Fair value of intangible assets acquired	$	1,295	7