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Acquisitions and Divestitures | 12 Months Ended
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Mar. 31, 2023
Business Combination and Asset Acquisition [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures 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 workfo rce. 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. 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 - short-term |  |  |  |  |  |  | (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 On October 14, 2022, the Company completed the acquisition of EverWatch Corp. (“EverWatch”), a leading provider of advanced solutions to the defense and intelligence communities for approximately $445.1 million, net of post-closing adjustments and also incurred transaction costs as part of the acquisition. The acquisition was funded with cash on hand. As a result of the transaction, EverWatch became a wholly owned subsidiary of Booz Allen Hamilton Inc. The following table summarizes the consideration and the preliminary allocation of the purchase price paid for EverWatch:
Cash consideration (gross of cash acquired and including net adjustments) | $ | 445,074 |
Purchase price allocation: |
Cash | 4,779 |
Current assets | 27,725 |
Operating lease right-of-use asset | 7,894 |
Other long-term assets | 4,511 |
Intangible assets | 116,500 |
Deferred tax liabilities | (22,337) |
Current liabilities | (11,613) |
Operating lease liabilities - short-term | (1,362) |
Operating lease liabilities - long-term | (6,532) |
Total fair value of identifiable net assets acquired | $ | 119,565 |
Goodwill | $ | 325,509 |
The acquisition was 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. The goodwill of $325.5 million is primarily attributable to EverWatch's specialized workforce and the expected synergies between the Company and EverWatch. The Company preliminarily recognized $116.5 million of intangible assets which consists primarily of contract 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 will be amortized over the estimated useful life of 14 years. The valuation of intangible assets remains preliminary as it is based on valuation estimates and assumptions that the Company is continuing to review and refine, specifically related to prospective financial information. The Company will continue to collect and assess information necessary to complete the valuation within the measurement period, which is up to one year from the acquisition date. Any adjustments to our estimates of intangible asset valuation will be between intangible assets and goodwill, and any deferred tax effects, and will be made in the periods in which the adjustments are determined. The cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. Pro forma results of operations for this acquisition are not presented because the acquisition is not material to the Company's consolidated results of operations. Divestitures Middle East and North Africa Management Consulting Business On September 1, 2022, the Company completed the divestiture of its management consulting business serving the Middle East and North Africa (“MENA”) region to Oliver Wyman, a global management consulting firm and a business of Marsh McLennan. The divestiture was substantially comprised of the contracts associated with the MENA business, the assets and liabilities associated with those contracts, and the workforce that provides services under those contracts. As a result of this transaction, the Company de-recognized the assets and liabilities associated with the MENA business and recognized a pre-tax gain of $31.2 million in the second quarter of fiscal 2023, which is reflected in other income, net, on the consolidated statement of operations. The consideration for the sale of the business is subject to customary working capital adjustments, which may impact the amount of gain recognized. Managed Threat Services Business On December 5, 2022, the Company completed the divestiture of its commercial Managed Threat Services (“MTS”) business to Security On-Demand. The divestiture was substantially comprised of the contracts associated with the MTS business, the assets and liabilities associated with those contracts, and the workforce that provides services under those contracts. As a result of this transaction, the Company de-recognized the assets and liabilities associated with the MTS business and recognized a pre-tax gain of $4.6 million during the third quarter of fiscal 2023, which is reflected in other income, net, on the consolidated statement of operations. The consideration for the sale of the business is subject to customary working capital adjustments and contingent consideration, which may impact the amount of gain recognized. Business Deconsolidation In December 2022, the Company forfeited certain participating rights of a consolidated artificial intelligence software platform business which has unrelated third-party interest holders and is classified as a variable interest entity (“VIE”). As a result of this transaction, the Company has determined that it is not the primary beneficiary of the VIE and thus de-recognized the assets, liabilities and non-controlling interest of this business. The Company recorded the fair value of its retained equity investment of $7.6 million which is accounted for under the measurement alternative. The resulting pre-tax gain, calculated as the investment value less the net de-recognized balances, was $8.9 million and is reflected in other income, net, on the consolidated statement of operations.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 + Details
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