ACQUISITIONS AND DIVESTITURES

12 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Tracepoint Holdings, LLC

On September 10, 2021, the Company acquired the remaining 60% equity interest in Tracepoint Holdings, LLC ("Tracepoint"), an industry-leading digital forensics and incident response company serving public and private sector clients, for cash consideration of approximately $120.3 million, net of adjustments (the "Tracepoint Transaction"). As a result of the transaction, Tracepoint and Tracepoint, LLC became wholly owned subsidiaries of Booz Allen Hamilton Inc. The acquisition complements the Company’s existing cybersecurity portfolio and expands its position in the private sector cyber market.

Prior to the closing of the Tracepoint Transaction, the Company held a 40% interest in Tracepoint, which was accounted for as an equity method investment. The equity method investment associated with Tracepoint was remeasured at fair value on the closing date of the Tracepoint Transaction, resulting in a gain of $5.7 million. This gain is presented as a component of Other Income on the Consolidated Statement of Operations for fiscal 2022. The fair value of the previously held equity method investment was determined based upon valuations of the Tracepoint business and future business outlook using projected future cash flows.

As a result of the Tracepoint transaction, the Company recognized $90.5 million of intangible assets which primarily consists of channel relationships. Channel relationships were valued using the excess earnings method discounted cash flow approach, incorporating Level 3 inputs as described under the fair value hierarchy of ASC No. 820, Fair Value Measurement (Topic 820). These unobservable inputs reflect the Company's own judgment about which assumptions market participants would use in pricing an asset on a non-recurring basis. The intangible asset is expected to be amortized over the estimated useful life of 10 years. The goodwill of $94.3 million is largely attributable to Tracepoint's specialized workforce. During the fourth quarter of fiscal 2022, the Company finalized Tracepoint's post-closing working capital.

Liberty IT Solutions, LLC

On June 11, 2021, the Company acquired Liberty IT Solutions, LLC ("Liberty") for cash consideration of approximately $669.1 million, net of adjustments related to working capital, and transaction costs incurred as part of the acquisition, including compensation expenses paid by the Company that were associated with employee retention. As a result of the transaction, Liberty became a wholly owned subsidiary of Booz Allen Hamilton Inc. Liberty is a leading digital partner driving transformation across the federal IT ecosystem. The acquisition complements the Company’s digital transformation portfolio resulting in a deeper range of advanced technology solutions.

The Company recognized $309.0 million of intangible assets which consist of programs and contracts assets, and were valued using the excess earnings method discounted cash flow approach, incorporating Level 3 inputs as described under the fair value hierarchy of Topic 820. These unobservable inputs reflect the Company's own judgment about which assumptions market participants would use in pricing an asset on a non-recurring basis. The intangible assets are expected to be amortized over the estimated useful life of 12 years. The goodwill of $346.5 million is primarily attributable to Liberty's specialized workforce and the expected synergies between the Company and Liberty. During the third quarter of fiscal 2022, the Company finalized Liberty's post-closing working capital.

Purchase Price Allocation

The following table summarizes the cumulative consideration paid and the allocation of the purchase price paid for Tracepoint and Liberty:


Cash consideration (gross of cash acquired and including net adjustments)	$	789,429
Fair value of non-controlling interest	80,063
Total purchase consideration	869,492

Purchase price allocation:
Cash	9,096
Current assets	57,519
Operating lease right-of-use asset	2,532
Other long-term assets	2,825
Intangible assets	399,500
Current liabilities	(40,217)
Operating lease liabilities-current	(1,017)
Operating lease liabilities-long term	(1,516)
Total fair value of identifiable net assets acquired	$	428,722

Goodwill	$	440,770

The acquisitions of Liberty and Tracepoint were accounted for under the acquisition method of accounting, which requires the total acquisition consideration to be allocated to the assets acquired and liabilities assumed based on an estimate of the acquisition date fair value, with the difference reflected in goodwill. As of March 31, 2022, the Company had completed the determination of fair values of the acquired assets and liabilities assumed. Pro forma results of operations for these acquisitions in the aggregate are not presented because these acquisitions are not material to the Company's consolidated results of operations.

EverWatch

In the fourth quarter of fiscal 2022, the Company announced that it had entered into a definitive agreement to acquire EverWatch Corp. ("EverWatch"), a leading provider of advanced solutions to the defense and intelligence communities for approximately $440.0 million, subject to customary adjustments. The Company expects to fund the acquisition with cash on hand. The transaction is expected to close in fiscal 2023.

Divestitures

In April 2022, the Company entered into an agreement with Oliver Wyman, a global management consulting firm and a business of Marsh McLennan, to divest the Company's management consulting business serving the Middle East and North Africa (MENA) region, which is substantially comprised of the contracts associated with the MENA business and the team of management consultants that provide services under those contracts. The Company concluded that the assets and liabilities associated with the MENA business met the criteria to be reported as held for sale on the consolidated balance sheet as of March 31, 2022. As of March 31, 2022, $23.6 million of accounts receivable, $0.7 million of other assets, $1.7 million of deferred revenue, and $0.2 million of accounts payable were included in other current assets and other current liabilities on the consolidated balance sheet. The transaction is expected to close in fiscal 2023, subject to customary closing conditions, including regulatory approvals.