Acquisitions

3 Months Ended

Mar. 31, 2021

For the three months ended March 31, 2021 and the year ended December 31, 2020, the Company completed a number of acquisitions, none of which were material, individually or in the aggregate, to the Company’s consolidated statements of operations and financial position. The aggregate details of the Company’s acquisition activity are as follows:


	Acquisitions Completed in
	Three Months Ended		Year Ended
	March 31, 2021		December 31, 2020
Number of acquisitions	3		6
Cash paid at closing	$	59,301	$	98,298
Cash acquired	(1,326)		(5,266)
Net cash paid	$	57,975	$	93,032

The fair value of the contingent consideration from acquisitions is included in the consolidated balance sheets as follows:


	March 31, 2021		December 31, 2020
Accruals and other current liabilities	$	3,093	$	2,884
Other liabilities	1,692		1,415
Contingent consideration from acquisitions	$	4,785	$	4,299

The fair value of non-contingent consideration from acquisitions is included in the consolidated balance sheets as follows:


	March 31, 2021		December 31, 2020
Accruals and other current liabilities	$	2,323	$	685
Other liabilities	2,635		1,774
Non-contingent consideration from acquisitions	$	4,958	$	2,459

The operating results of the acquired businesses are included in the Company’s consolidated financial statements from the closing date of each respective acquisition. The purchase price for each acquisition has been allocated to the net tangible and intangible assets and liabilities based on their estimated fair values at the respective acquisition date. Independent valuations are obtained to support purchase price allocations when deemed appropriate.

In connection with the purchase price allocations related to the Company’s acquisitions, the Company has estimated the fair values of the support obligations assumed relative to acquired deferred revenue. The estimated fair values of the support obligations assumed were determined using a cost‑build‑up approach. The cost‑build‑up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin. For accounting purposes, the sum of the costs and operating profit approximates the amount that the Company would be required to pay a third party to assume the support obligations. These fair value adjustments reduce the revenues recognizable over the remaining support contract term of the Company’s acquired contracts. For the three months ended March 31, 2021 and 2020, the fair value adjustments to reduce revenue were $12 and $116, respectively.

The purchase accounting for the three acquisitions completed for the three months ended March 31, 2021 and two of the acquisitions completed during the year ended December 31, 2020 are not yet completed. Identifiable assets acquired and liabilities assumed were provisionally recorded at their estimated fair values on the respective acquisition date. The initial accounting for these business combinations is not complete because the evaluation necessary to assess the fair values of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified from the date of the acquisition as more information is obtained about the fair values of assets acquired and liabilities assumed, however such measurement period cannot exceed one year.

Acquisition and integration costs are expensed as incurred and are recorded in General and administrative in the consolidated statements of operations. For the three months ended March 31, 2021 and 2020, the Company incurred acquisition and integration costs of $6,861 and $813, respectively, which include costs related to legal, accounting, valuation, general administrative, and other consulting fees. For the three months ended March 31, 2021, $6,716 of the Company’s acquisition and integration costs related to entering into the definitive agreement to acquire Seequent Holdings Limited (“Seequent”). See the section titled “—Acquisitions Subsequent to March 31, 2021” below.

The following summarizes the fair values of the assets acquired and liabilities assumed, as well as the weighted average useful lives assigned to acquired intangible assets at the respective date of each acquisition (including contingent consideration):


	Acquisitions Completed in
	Three Months Ended		Year Ended
	March 31, 2021		December 31, 2020
Consideration:
Cash paid at closing	$	59,301	$	98,298
Contingent consideration	549		2,380
Deferred, non-contingent consideration, net	1,718		1,416
Total consideration	$	61,568	$	102,094
Assets acquired and liabilities assumed:
Cash	$	1,326	$	5,266
Prepaid and other current assets	5,617		8,701
Operating lease right-of-use assets	192		2,529
Property and equipment	550		499
Other assets	300		36
Customer relationship asset (weighted average useful life of 5 and 6 years, respectively)	11,326		11,371
Software and technology (weighted average useful life of 3 years)	1,399		2,207
Non-compete agreement (useful life of 5 years)	—		200
Trademarks (weighted average useful life of 3 and 7 years, respectively)	481		3,953
Total identifiable assets acquired excluding goodwill	21,191		34,762
Accruals and other current liabilities	(3,678)		(4,991)
Deferred revenues	(1,902)		(5,351)
Operating lease liabilities	(192)		(2,529)
Deferred income taxes	(3,280)		(1,701)
Other liabilities	(178)		(86)
Total liabilities assumed	(9,230)		(14,658)
Net identifiable assets acquired excluding goodwill	11,961		20,104
Goodwill	49,607		81,990
Net assets acquired	$	61,568	$	102,094

The fair values of the working capital, other assets (liabilities), and property and equipment approximated their respective carrying values as of the acquisition date.

As discussed above, the fair values of deferred revenues were determined using the cost‑build‑up approach.

The fair values of the intangible assets were primarily determined using the income approach. When applying the income approach, indications of fair values were developed by discounting future net cash flows to their present values at market‑based rates of return. The cash flows were based on estimates used to price the acquisitions and the discount rates applied were benchmarked with reference to the implied rate of return from the Company’s pricing model and the weighted average cost of capital.

Goodwill recorded in connection with the acquisitions was attributable to synergies expected to arise from cost saving opportunities, as well as future expected cash flows. Of the goodwill recorded as of March 31, 2021, none is expected to be deductible for tax purposes.

Acquisitions Subsequent to March 31, 2021

In April 2021, the Company completed two acquisitions and entered into a definitive agreement to acquire a third company totaling approximately $54,200 in cash, net of cash acquired and subject to customary adjustments, including for working capital. The third acquisition is expected to close during May 2021. The acquisitions are not expected to be material to the Company’s consolidated statements of operations and financial position.

On March 11, 2021, the Company entered into a definitive agreement to acquire Seequent, a leader in software for geological and geophysical modeling, geotechnical stability, and cloud services for geodata management and collaboration, for approximately $900,000 in cash, net of cash acquired and subject to customary adjustments, including for working capital, plus 3,141,361 shares of the Company’s Class B Common Stock. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close during the second quarter of 2021. The Company expects to use readily available cash, including a portion of the net proceeds from the January 26, 2021 convertible debt offering (see Note 10), and borrowings under its bank credit facility (see Note 10), to fund the cash component of the transaction.