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Note 10 - Acquisitions

12 Months Ended

Dec. 31, 2021

Business Combination Disclosure [Text Block]

2021 Acquisitions

On December 23, 2021, we acquired approximately 96.7 percent of the stock of ACTINEO GmbH ("ACTINEO") with an option to acquire the remaining shares at a future date, for a net cash purchase price of $148.9 million. ACTINEO offers a comprehensive portfolio of services, technology and data solutions to support the entire bodily injury settlement process. With this acquisition, we add ACTINEO's established claims management solutions to our leading data analytics and insurance ecosystem, providing customers with digitalization and medical expertise solutions throughout the entire claims process. ACTINEO is part of the claims vertical within our Insurance segment.

On November 2, 2021, we acquired 100 percent of the stock of Data Driven Safety, LLC ("Data Driven Safety") for a net cash purchase price of $93.5 million, of which $2.0 million represents indemnity escrows. Data Driven Safety, a leading public record data aggregation firm that specializes in driver risk assessment in the U.S., has become a part of the underwriting & rating category within our Insurance segment. We believe that Data Driven Safety will expand our robust auto insurance analytics, providing insurers with information to further refine underwriting, improve the customer experience and promote public safety.

On September 1, 2021, we acquired 100 percent of the stock of Ignite Software Systems Limited ("Ignite") for a net cash purchase price of $13.8 million. Ignite, a provider of insurance policy administration systems to brokers, managing general agents, and insurers, has become a part of the underwriting & rating category within our Insurance segment. We believe that Ignite's client focus and deep domain knowledge will fit into our business model providing new and existing clients with access to a broader expert advice and service.

On June 17, 2021, we acquired 100 percent of the stock of Roskill Holdings Limited ("Roskill") for a net cash purchase price of $22.1 million, of which $4.8 million represents indemnity escrows. Roskill, a provider of metals and materials supply chain intelligence, has become part of our Energy and Specialized Markets segment. Roskill’s capabilities reinforce our ability to provide comprehensive analysis across the energy, and metals and mining value chain while adding analysis, data, and insight on battery raw materials metals.

On March 2, 2021, we acquired a 51.0 percent ownership in Whitespace Software Limited ("Whitespace") for a net cash purchase price of $16.8 million. The remaining 49.0 percent ownership interest in Whitespace will be acquired by us, in three equal proportions over the next three years, at a purchase price determined based upon a fixed revenue multiple and adjusted for any free cash flow shortfall. Whitespace, a provider of digital placing technology to the (re)insurance market, has become part of the underwriting & rating category within our Insurance segment. We expect our investment in Whitespace to enable a seamless real-time quote-to-bind electronic placing and global distribution solution, with straight-through submissions for our customers.

The preliminary purchase price allocation of the 2021 acquisitions resulted in the following:

	*ACTINEO*		*Data Driven Safety*		*Others*		*Total*
Cash and cash equivalents	$	0.2	$	3.4	$	5.7	$	9.3
Accounts receivable		1.8		1.1		2.1		5.0
Other current assets		—		2.0		1.2		3.2
Fixed assets		1.4		—		0.2		1.6
Operating lease right-of-use assets, net		4.2		0.4		0.9		5.5
Intangible assets		48.3		42.1		25.3		115.7
Goodwill		121.9		73.7		61.5		257.1
Other assets		—		—		4.8		4.8
Total assets acquired		177.8		122.7		101.7		402.2
Current liabilities		2.1		3.3		4.0		9.4
Deferred revenues		—		0.4		4.7		5.1
Operating lease liabilities		4.2		0.4		0.9		5.5
Deferred income tax, net		15.8		—		5.2		21.0
Other liabilities		—		21.7		4.8		26.5
Total liabilities assumed		22.1		25.8		19.6		67.5
Net assets acquired		155.7		96.9		82.1		334.7
Less: Noncontrolling interests		6.6		—		19.8		26.4
Less: Cash acquired		0.2		3.4		5.7		9.3
Net cash purchase price	$	148.9	$	93.5	$	56.6		299.0

The preliminary amounts assigned to intangible assets by type for our 2021 acquisitions are summarized in the table below:

	*Weighted Average Useful Life (in years)*	*Total*
Technology-based	5	$	21.2
Marketing-related	4		1.4
Customer-related	13		84.7
Database-based	5		8.4
Total intangible assets		$	115.7

The preliminary allocations of the purchase price for the 2021 acquisitions with less than a year of ownership are subject to revisions as additional information is obtained about the facts and circumstances that existed as of each acquisition date. The revisions may have a significant impact on our consolidated financial statements. The allocations of the purchase price will be finalized once all the information is obtained, but not to exceed one year from the acquisition date. The primary areas of the purchase price allocation that are not yet finalized relate to income and non-income taxes, deferred revenues, the valuation of intangible assets acquired, right-of-use assets and operating lease liabilities and residual goodwill. The goodwill associated with our acquisitions include the acquired assembled work force, the value associated with the opportunity to leverage the work force to continue to develop the technology and content assets, as well as our ability to grow through adding additional customer relationships or new solutions in the future. Of the $257.1 million in goodwill associated with our acquisitions, $182.5 million is not deductible for tax purposes. The preliminary amounts assigned to intangible assets by type for these acquisitions were based upon our valuation model and historical experiences with entities with similar business characteristics.

For the year ended December 31, 2021, we incurred transaction costs related to acquisitions of $2.8 million, which are included within "Selling, general and administrative expenses in the accompanying consolidated statements of operations. Refer to Note 12. Goodwill and Intangible Assets for further discussion.

Our 2021 acquisitions were not significant, both individually and in the aggregate, to our consolidated financial statements for the years ended December 31, 2021, 2020 and 2019, and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.

2020 Acquisitions

On December 16, 2020, we acquired 100 percent of the stock of Lead Intelligence, Inc. ("Jornaya"), a provider of consumer behavioral data and intelligence, for a net cash purchase price of $124.9 million. The acquisition added Jornaya's proprietary view of consumer buying journeys to our growing set of marketing solutions for the insurance and financial services markets, as well as provide customers with the intelligence and agility to time and tailor interactions based on actual in-market behaviors. Jornaya has become part of the underwriting & rating category within our Insurance segment. The final purchase price allocation of the acquisition is presented in the table below.

On September 9, 2020, we acquired 100 percent of the stock of Franco Signor LLC ("Franco Signor") for a net cash purchase price of $159.7 million, of which $8.0 million represents indemnity escrows. Franco Signor is a Medicare Secondary Payer compliance solutions provider to large employers, insurers and third-party administrators in the U.S. Franco Signor has become part of the claims category within our Insurance segment and enhanced the solutions we currently offer, as well as added professional administrative services for Medicare Set Asides to our suite of solutions. The final purchase price allocation of the acquisition is presented in the table below.

The final purchase price allocations, inclusive of closing adjustments, of our 2020 acquisitions resulted in the following:

	*Lead Intelligence*		*Franco Signor*			*Total*
Cash and cash equivalents ⁽¹⁾	$	5.9	$	10.9		$	16.8
Accounts receivable		2.8		2.2			5.0
Other current assets		1.4		0.9			2.3
Fixed assets		0.8		0.4			1.2
Operating lease right-of-use assets, net		1.6		1.5			3.1
Intangible assets		64.3		59.1			123.4
Goodwill		69.9		101.5			171.4
Other assets		0.1		8.0			8.1
Total assets acquired		146.8		184.5			331.3
Current liabilities ⁽¹⁾		2.1		8.3			10.4
Deferred revenues		2.6		0.3			2.9
Operating lease liabilities		1.6		1.5			3.1
Deferred income tax, net		9.7		1.5			11.2
Other liabilities		—		8.0			8.0
Total liabilities assumed		16.0		19.6			35.6
Net assets acquired		130.8		164.9			295.7
Less: Cash and cash equivalents		5.9		10.9			16.8
Restricted cash ⁽¹⁾		—		(5.7	)		(5.7	)
Cash acquired		5.9		5.2			11.1
Net cash purchase price	$	124.9	$	159.7		$	284.6

_______________

⁽¹⁾Within cash and cash equivalents, there is $5.7 million of restricted cash related to Franco Signor's professional administrative services for Medicare Set Asides, with an offsetting liability of $5.7 million included within current liabilities.

The final amounts assigned to intangible assets by type for our 2020 acquisitions are summarized in the table below:

	*Weighted Average Useful Life (in years)*	*Total*
Technology-based	11	$	30.8
Marketing-related	5		2.1
Customer-related	11		90.5
Total intangible assets		$	123.4

For the year ended December 31, 2021, we finalized the purchase accounting for our 2020 acquisitions during the measurement periods in accordance with ASC 805, Business Combinations. The impact of finalization of the purchase accounting associated with these acquisitions was not material to our accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019.

The goodwill of $90.6 million associated with the purchases of Jornaya and Franco Signor is not deductible for tax purposes. For the year ended December 31, 2020, we incurred transaction costs related to acquisitions of $2.2 million, which are included within "Selling, general and administrative" expenses in our accompanying consolidated statements of operations. Refer to Note 12. Goodwill and Intangible Assets for further discussion.

Our 2020 acquisitions were not significant, both individually and in the aggregate, to our consolidated financial statements for the years ended December 31, 2020 and 2019, and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.

2019 Acquisitions

On December 23, 2019, we acquired 100 percent of the stock of Flexible Architecture and Simplified Technology, LLC ("FAST"), a software company for the life insurance and annuity industry, for a net cash purchase price of $193.9 million, of which $1.9 million represents indemnity escrows. FAST offers a flexible policy administration system that helps insurers accelerate underwriting and claims to enhance the customer experience and support profitable growth. FAST has become part of the underwriting & rating category within our Insurance segment, and expanded and enhanced the suite of solutions that we are developing across the enterprise for life insurers looking to transform the customer experience throughout the life of the policy, from quote to claims. The final purchase price allocation of the acquisition is presented in the table below.

On December 19, 2019, we acquired selected assets of Commerce Signals, Inc. ("Commerce Signals"), a software company that offers a data sharing platform for retail, restaurant and entertainment marketers, for a net cash purchase price of $3.9 million, which consists of a holdback of $1.1 million as security for the indemnification obligations of the seller. Commerce Signals has become part of our Financial Services segment, and enhanced the existing solutions that we currently offer. The final purchase price allocation of the acquisition is presented as part of "Others" in the table below.

On November 5, 2019, we acquired 100 percent of the stock of Genscape, Inc. (“Genscape”), a global provider of real-time data and intelligence for commodity and energy markets, for a net cash purchase price of $351.0 million. Genscape has become part of the Energy and Specialized Markets segment, and enhanced our existing sector intelligence in energy data and analytics. The final purchase price allocation of the acquisition is presented in the table below.

On October 10, 2019, we acquired 100 percent of the stock of BuildFax, Inc. ("BuildFax") for a net cash purchase price of $40.2 million, which consists a holdback of $1.0 million. BuildFax uses building permit, contractor, and inspection data to provide information about the condition of properties to insurance and financial institutions. The data from BuildFax enhances property analytics under the underwriting & rating category within our Insurance segment while helping underwriters gain insight into changes in the property insured. The final purchase price allocation of the acquisition is presented in the table below.

On August 28, 2019, we acquired substantially all of the assets of Property Pres Wizard, LLC. ("PPW") for a net cash purchase price of $15.0 million, of which $1.5 million represents indemnity escrows. PPW is a web and mobile application that manages work order details and property status in the field services industry throughout the supply chain. PPW has become part of the claims category within our Insurance segment, and added a service order and project management application to our PropTech suite of solutions. The final purchase price allocation of the acquisition is presented as part of "Others" in the table below.

On July 31, 2019, we acquired 100 percent of the stock of Keystone Aerial Surveys, Inc. ("Keystone") for a net cash purchase price of $29.4 million, of which $2.7 million represents indemnity escrows, to expand our remote imagery business. Keystone sourced imagery by providing customers geospatial solutions and had become part of the claims category within our Insurance segment. Keystone was a component within the aerial imagery sourcing group, which was qualified as assets held for sale on December 2, 2019. On February 1, 2020, the sale of the aerial imagery sourcing group was closed. See Note 11 . Dispositions for further discussion. The final purchase price allocation of the acquisition is presented as part of "Others" in the table below.

On March 29, 2019, we entered into an agreement with an enterprise application software provider to acquire their Content as a Service (“CaaS”) business, which included the Environmental Health and Safety Regulatory Content and Environmental Health and Safety Regulatory Documentation teams and data assets, for a net cash purchase price of $65.2 million. The CaaS business has become part of our Energy and Specialized Markets segment. This transaction strengthened our environmental health and safety services business and extended our global customer footprint and European operations. The final purchase price allocation of the acquisition is presented in the table below.

The final purchase price allocations, inclusive of closing adjustments, of our 2019 acquisitions resulted in the following:

	FAST			Genscape			BuildFax			CaaS			Others			Total
Cash and cash equivalents	$	2.9		$	0.2		$	0.4		$	3.7		$	3.1		$	10.3
Accounts receivable		4.7			13.6			1.8			—			3.9			24.0
Other current assets		0.4			1.4			0.1			0.7			0.6			3.2
Fixed assets		1.8			15.9			0.9			0.2			6.3			25.1
Operating lease right-of-use assets, net		1.4			7.4			0.4			—			0.5			9.7
Intangible assets		69.0			153.2			21.9			34.4			14.1			292.6
Goodwill		120.7			241.4			20.2			41.2			28.2			451.7
Other assets		0.1			—			—			0.1			4.4			4.6
Total assets acquired		201.0			433.1			45.7			80.3			61.1			821.2
Current liabilities		2.4			17.4			0.9			1.3			1.3			23.3
Deferred revenues		0.3			27.3			2.4			10.1			—			40.1
Operating lease liabilities		1.4			7.4			0.4			—			0.5			9.7
Deferred income tax, net		—			29.8			0.4			—			2.6			32.8
Other liabilities		—			—			1.0			—			5.3			6.3
Total liabilities assumed		4.1			81.9			5.1			11.4			9.7			112.2
Net assets acquired		196.9			351.2			40.6			68.9			51.4			709.0
Cash acquired		(3.0	)		(0.2	)		(0.4	)		(3.7	)		(3.1	)		(10.4	)
Net cash purchase price	$	193.9		$	351.0		$	40.2		$	65.2		$	48.3		$	698.6

The final amounts assigned to intangible assets by type for our 2019 acquisitions are summarized in the table below:

	*Weighted Average Useful Life (in years)*	*Total*
Technology-based	6	$	81.9
Marketing-related	4		3.9
Customer-related	12		185.5
Database-based	10		20.7
Total intangible assets		$	292.0

For the year ended December 31, 2020, we finalized the purchase accounting for our 2019 acquisitions during the measurement periods in accordance with ASC 805, Business Combinations. The impact of finalization of the purchase accounting associated with these acquisitions was not material to our accompanying consolidated statements of operations for the years ended December 31, 2019 and 2018.

The goodwill of $307.1 million associated with the purchases of FAST, Commerce Signals, Genscape, BuildFax, PPW, Keystone, and CaaS is not deductible for tax purposes. For the year ended December 31, 2019, we incurred transaction costs related to acquisitions of $3.0 million, which are included within "Selling, general and administrative" expenses in our accompanying consolidated statements of operations. Refer to Note 12. Goodwill and Intangible Assets for further discussion.

Our 2019 acquisitions were not significant, both individually and in the aggregate, to our consolidated financial statements for the year ended December 31, 2019 and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.

Acquisition Escrows and Related Liabilities

Pursuant to the related acquisition agreements, we have funded various escrow accounts to satisfy pre-acquisition indemnity and tax claims arising subsequent to the acquisition dates, as well as a portion of the contingent payment. During the years ended December 31, 2021 and 2020, we released $12.1 million and $0.8 million of indemnity escrows related to various acquisitions. At December 31, 2021 and 2020, the current portion of the escrows amounted to $10.6 million and $1.5 million, and the noncurrent portion of the escrows amounted to $4.7 million and $18.5 million, respectively. The current and noncurrent portions of the escrows have been included in "Other current assets" and "Other noncurrent assets" in our accompanying consolidated balance sheets, respectively.

The acquisitions of Arium Limited, Rebmark Legal Solutions Limited, ACTINEO GmbH, and Data Driven Safety, LLC included acquisition-related contingent payments, for which the sellers of these acquisitions could receive additional payments by achieving the specific predetermined revenue, EBITDA, and EBITDA margin earn-out targets for exceptional performance. We believe that the liabilities recorded as of December 31, 2021 and 2020 reflect the best estimate of acquisition-related contingent payments. The associated current portion of contingent payments were $0.5 million and $0.6 million as of December 31, 2021 and 2020, respectively. The associated noncurrent portion of contingent payments were $21.7 million and $0.2 million as of December 31, 2021 and 2020, respectively.