v3.21.2

Acquisitions | 9 Months Ended
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Sep. 30, 2021
Business Combinations [Abstract] |
Acquisitions | 4. Acquisitions 2021 Acquisitions Alight Business Combination On July 2, 2021, the Company completed the Business Combination for consideration transferred of approximately $5.0 billion. The Business Combination was accounted for using the acquisition method under Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”), which requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The preliminary consideration and allocation of the purchase price to the fair value of the combined assets acquired and liabilities assumed is presented below. The preliminary measurement of consideration transferred, including noncontrolling interest, and the allocations reflect the best estimates of the valuations currently available and are subject to change once additional analyses are completed. The accounting for the Business Combination is not complete as the valuation for certain acquired assets and liabilities have not been finalized and these final valuations of the assets and liabilities could have a material impact on the preliminary purchase price allocation disclosed below. The allocation will be finalized as soon as practicable, but no later than one year from the acquisition date. On the Closing Date, the Company paid $36 million of deferred underwriting costs related to FTAC’s initial public offering and $37 million of fees related to the PIPE Investment, which were treated as a reduction of equity. Approximately $21 million of the Company’s acquisition-related costs were paid on the Closing Date. Additionally, $39 million of seller transaction costs were paid on the Closing Date, including $36 million in advisory and investment banker fees that were contingent upon the consummation of the Business Combination. As these fees are considered success fees in nature, they are considered to have been incurred “on the line”, and therefore, were not recognized in the Condensed Consolidated Statements of Comprehensive Income (Loss) in either the Predecessor or Successor periods. On the Closing Date, approximately $36 million of certain executive compensation related expenses that were contingent upon the closing of the Business Combination were triggered. As these expenses were contingent upon the change-in-control event, they are considered to have been incurred “on the line”, and therefore, were not recognized in the Condensed Consolidated Statements of Comprehensive Income (Loss) in either the Predecessor or Successor periods. The following table summarizes the preliminary consideration transferred (in millions):
Cash consideration to prior equityholders(1) |  | $ |  | 1,055 |
Repayment of debt |  |  |  | 1,814 |
Total cash consideration |  | $ |  | 2,869 |
Continuing unitholders rollover equity into the Company(2) |  |  |  | 1,414 |
Contingent consideration - Tax Receivable Agreement(3) |  |  |  | 578 |
Contingent consideration - Seller Earnouts(3) |  |  |  | 109 |
Total consideration transferred |  | $ |  | 4,970 |
Noncontrolling interest(4) |  | $ |  | 838 |
(1) Includes cash consideration paid to reimburse seller for certain transaction expenses. (2) The Company issued approximately 141 million shares that had a total fair value of approximately $1.4 billion based on the price of $10 per share on July 2, 2021, the acquisition date. (3) The TRA and Seller Earnouts represent liability classified contingent consideration. The estimated fair values are preliminary and subject to adjustments in subsequent periods. Refer to Note 9 “Stockholders’ and Members’ Equity”, Note 14 “Financial Instruments” and Note 15 “Fair Value Measurement” for further discussion. (4) The fair value of the noncontrolling interest is estimated based on the fair value of acquired business. The fair value of the noncontrolling interest is preliminary and subject to adjustments in subsequent periods. The noncontrolling interest is exchangeable for Company Class A Common Stock at the option of the holder. Refer to Note 9 “Stockholders’ and Members’ Equity” for additional information. The following table summarizes the preliminary purchase price allocation (in millions):
Cash and cash equivalents |  | $ |  | 460 |
Receivables |  |  |  | 486 |
Fiduciary assets |  |  |  | 1,015 |
Other current assets |  |  |  | 159 |
Fixed assets |  |  |  | 206 |
Deferred tax assets, net |  |  |  | 4 |
Other assets |  |  |  | 440 |
Accounts payable and accrued liabilities |  |  |  | (327 | )
Fiduciary liabilities |  |  |  | (1,015 | )
Other current liabilities |  |  |  | (302 | )
Debt assumed |  |  |  | (2,370 | )
Other liabilities |  |  |  | (381 | )
Intangible assets |  |  |  | 4,078 |
Total identifiable net assets |  | $ |  | 2,453 |
Goodwill |  | $ |  | 3,356 |
Intangible Assets Intangible assets were identified that met either the separability criterion or the contractual-legal criterion described in ASC 805. The trade name intangible asset represents the corporate Alight tradename, which was valued using the relief-from-royalty method. The technology related intangible assets represent software developed by Alight Holdings to differentiate its product/service offerings for its customers, valued using the relief-from-royalty method. The customer related and contract based intangible assets represent strong, long-term relationships with customers, valued using the multi-period excess earnings method. The preliminary values allocated to identifiable intangible assets and their estimated useful lives are as follows:
|  | Fair value |  |  | Useful life
Identifiable intangible assets |  | (in millions) |  |  | (in years)
Definite lived trade names |  | $ |  | 400 |  |  | 15
Technology related intangibles |  | $ |  | 222 |  |  | 6
Customer related and contract based intangibles |  | $ |  | 3,456 |  |  | 15
Goodwill Approximately $3.4 billion has been preliminarily allocated to goodwill. Goodwill represents the excess of the gross consideration transferred over the fair value of the underlying net tangible and identifiable definite-lived intangible assets acquired. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill, including assembled workforce and expected future market conditions. Pro Forma Financial Information The following unaudited pro forma financial information presents the results of operations as if the Business Combination had occurred on January 1, 2020. The unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved nor are they necessarily indicative of future results of operations. The unaudited pro forma financial information is as follows (in millions):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Pro forma revenue |  | $ |  | 690 |  |  | $ |  | 668 |  |  | $ |  | 2,051 |  |  | $ |  | 2,008 |
Pro forma net loss |  | $ |  | (111 | ) |  | $ |  | (70 | ) |  | $ |  | (121 | ) |  | $ |  | (136 | )
Pro forma net loss attributable to controlling interest |  | $ |  | (99 | ) |  | $ |  | (56 | ) |  | $ |  | (107 | ) |  | $ |  | (111 | )
Pro forma net loss attributable to noncontrolling interest |  | $ |  | (12 | ) |  | $ |  | (14 | ) |  | $ |  | (14 | ) |  | $ |  | (25 | )
The unaudited pro forma financial information does not assume any impacts from revenue, cost or other operating synergies that could be generated as a result of the Business Combination. The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved had the Business Combination been consummated on January 1, 2020. The Successor and Predecessor periods have been combined in the pro forma financial information for the three and nine months ended September 30, 2021 and 2020 and include adjustments to reflect intangible asset amortization based on the economic values derived from definite-lived intangible assets and a reduction in interest expense related to the repayment of existing debt. Additionally, the unaudited pro forma financial information includes nonrecurring, direct transaction costs incurred in connection with the Business Combination of approximately $11 million for the nine months ended September 30, 2020. These adjustments are net of taxes. 2020 Acquisition The Company completed one acquisition during the year ended December 31, 2020. The acquisition was not material to the Company’s results of operations, financial position, or cash flows. The Company accounted for the acquisition as a business combination under ASC 805. The goodwill identified by this acquisition is primarily attributed to the synergies that are expected to be realized as well as intangible assets that do not qualify for separate recognition, such as assembled workforce. Goodwill is not amortized and is deductible for tax purposes. Upon completion of this acquisition, the business is now wholly-owned by the Company.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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