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Acquisitions | 12 Months Ended
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Dec. 31, 2021
Business Combinations [Abstract] |
Acquisitions |
3. | Acquisitions
BlackHorse Solutions, Inc. On July 6, 2021, the Company acquired a 100% ownership interest in BlackHorse Solutions, Inc (“BlackHorse”), a privately-owned company, for $205.0 million paid in cash. BlackHorse expands Parsons’ capabilities and products in next-generation military, intelligence, and space operations, specifically in cyber electronic warfare and information dominance. The acquisition was entirely funded by cash on-hand. In connection with this acquisition, the Company recognized $3.1 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2021, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition (in thousands):
|  | Amount |
Cash and cash equivalents |  | $ | 15,428 |
Accounts receivable |  |  | 3,351 |
Contract assets |  |  | 5,979 |
Prepaid expenses and other current assets |  |  | 937 |
Property and equipment |  |  | 2,239 |
Right of use assets, operating leases |  |  | 6,157 |
Goodwill |  |  | 143,830 |
Intangible assets |  |  | 64,000 |
Accounts payable |  |  | (2,326 | )
Accrued expenses and other current liabilities |  |  | (17,190 | )
Contract liabilities |  |  | (320 | )
Short-term lease liabilities, operating leases |  |  | (1,011 | )
Long-term lease liabilities, operating leases |  |  | (5,146 | )
Deferred tax liabilities |  |  | (10,660 | )
Other long-term liabilities |  |  | (235 | )
Net assets acquired |  | $ | 205,033 |
Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):
|  | Gross Carrying Amount |  |  | Amortization Period
|  |  |  |  |  | (in years)
Customer relationships |  | $ | 39,000 |  |  | 16
Backlog |  |  | 22,000 |  |  | 3
Trade name |  |  | 1,000 |  |  | 2
Developed technologies |  |  | 1,000 |  |  | 3
Non-compete agreements |  |  | 1,000 |  |  | 3
Amortization expense of $5.4 million related to these intangible assets was recorded for the year ended December 31, 2021. The entire value of goodwill of $143.8 million was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. Goodwill of $10.6 million is deductible for tax purposes. The amount of revenue generated by BlackHorse and included within consolidated revenues for 2021 is $35.3 million. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition. The Company is still in the process of finalizing its valuation of the net assets acquired. Supplemental Pro Forma Information (Unaudited) Supplemental information on an unaudited pro forma basis, as if the acquisition closed as of the beginning of the fiscal year ended December 31, 2020 as follows (in thousands):
|  | 2021 |  |  | 2020 |
|  | (unaudited) |  |  | (unaudited) |
Pro forma Revenue |  | $ | 3,699,227 |  |  | $ | 3,966,809 |
Pro forma Net Income including noncontrolling interests |  |  | 93,592 |  |  |  | 108,008 |
The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented. Echo Ridge LLC On July 30, 2021, the Company acquired a 100% ownership interest in Echo Ridge LLC (“Echo Ridge”), a privately-owned company, for $9.0 million in cash. Echo Ridge adds position, navigation, and timing devices; modeling, simulation, test, and measurement tools; and deployable software defined radio products and signal processing services to Parsons’ space portfolio. The acquisition was entirely funded by cash on-hand. In connection with this acquisition, the Company recognized $0.3 million of acquisition related “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2021, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. The Company allocated the purchase price to the appropriate classes of tangible assets and liabilities and assigned the excess of $7.2 million entirely to goodwill. The entire value of goodwill was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. Goodwill in its entirety is deductible for tax purposes. The amount of revenue generated by Echo Ridge and included within consolidated revenues for 2021 is $2.9 million. Braxton Science & Technology Group On November 19, 2020 the Company acquired a 100% ownership interest in Braxton Science & Technology Group (“Braxton”), a privately-owned company, for $310.9 million in cash. Braxton operates at the forefront of satellite operations, ground system automation, flight dynamics, and spacecraft and antenna simulation for the U.S. Department of Defense and Intelligence Community. The acquisition was entirely funded by cash on hand in August 2020, as described in “Note 12—Debt and Credit Facilities”. In connection with this acquisition, the Company recognized $5.5 million of acquisition-related expense in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2020, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. Braxton allows Parsons to capitalize on the quickly evolving space missions of its national security space customers and address rapid market growth driven by proliferated low earth orbit constellations, small satellite expansion, and space cyber resiliency. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the purchase price allocation as of the date of acquisition (in thousands):
|  | Amount |
Cash and cash equivalents |  | $ | 7,006 |
Accounts receivable |  |  | 18,163 |
Contract assets |  |  | 8,350 |
Prepaid expenses and other current assets |  |  | 3,036 |
Property and equipment |  |  | 5,114 |
Right of use assets, operating leases |  |  | 10,788 |
Goodwill |  |  | 212,185 |
Intangible assets |  |  | 74,950 |
Accounts payable |  |  | (7,464 | )
Accrued expenses and other current liabilities |  |  | (9,845 | )
Contract liabilities |  |  | (300 | )
Short-term lease liabilities, operating leases |  |  | (1,915 | )
Long-term lease liabilities, operating leases |  |  | (8,873 | )
Deferred tax liabilities |  |  | (1,694 | )
Net assets acquired |  | $ | 309,501 |
Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):
|  | Gross Carrying Amount |  |  | Amortization Period
|  |  |  |  |  | (in years)
Customer relationships |  | $ | 34,100 |  |  | 12
Backlog |  |  | 38,200 |  |  | 3
Developed technologies |  |  | 2,000 |  |  | 6
Non-compete agreements |  |  | 650 |  |  | 3
Amortization expense of $16.2 million and $1.3 million related to these intangible assets was recorded for the years ended December 31, 2021 and December 31, 2020, respectively. The entire value of goodwill was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. Goodwill of $200.5 million is deductible for tax purposes. The amount of revenue generated by Braxton and included within consolidated revenues for 2020 is $10.1 million. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition. Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the Braxton acquisition had been consummated as of the beginning of 2019 (in thousands) is as follows:
|  | 2020 |  |  | 2019 |
|  | (unaudited) |  |  | (unaudited) |
Pro forma Revenue |  | $ | 4,039,420 |  |  | $ | 4,042,810 |
Pro forma Net Income including noncontrolling interests |  |  | 125,298 |  |  |  | 126,076 |
The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented. QRC Technologies On July 31, 2019 the Company acquired a 100% ownership interest in QRC Technologies (“QRC”), a privately-owned company, for $214.1 million in cash. QRC provides design and development of open-architecture radio-frequency products. The Company borrowed $140.0 million under the Revolving Credit Facility to partially fund the transaction. In connection with this acquisition, the Company recognized $4.9 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2019, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. QRC is an agile, disruptive product company that specializes in radio frequency spectrum survey, record and playback; signals intelligence; and electronic warfare missions. QRC complements our existing portfolio, increases our presence in the high-growth markets of spectrum awareness and surveillance, adds critical intellectual property that complements and expands our available capabilities for the Special Operations and Intelligence Communities. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the purchase price allocation as of the date of acquisition (in thousands):
|  | Amount |
Cash and cash equivalents |  | $ | 5,925 |
Accounts receivable |  |  | 5,587 |
Prepaid expenses and other current assets |  |  | 5,727 |
Property and equipment |  |  | 1,205 |
Right of use assets, operating leases |  |  | 5,228 |
Goodwill |  |  | 125,091 |
Intangible assets |  |  | 76,200 |
Accounts payable |  |  | (1,567 | )
Accrued expenses and other current liabilities |  |  | (4,025 | )
Short-term lease liabilities, operating leases |  |  | (545 | )
Long-term lease liabilities, operating leases |  |  | (4,683 | )
Net assets acquired |  | $ | 214,143 |
Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):
|  | Gross Carrying Amount |  |  | Amortization Period |
|  |  |  |  |  | (in years) |
Customer relationships |  | $ | 49,800 |  |  |  | 12 |
Developed technologies |  |  | 21,800 |  |  | 3 to 5 |
In-process research and development |  |  | 1,800 |  |  | 3 to 5 |
Non-compete agreements |  |  | 1,200 |  |  |  | 4 |
Trade name |  |  | 800 |  |  |  | 2 |
Backlog |  |  | 800 |  |  |  | 1 |
Amortization expense of $13.1 million, $14.0 million and $5.7 million related to these intangible assets was recorded for the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively. The entire value of goodwill of $125.1 million was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. Goodwill in its entirety is deductible for tax purposes. The amount of revenue generated by QRC and included within consolidated revenues for the year ended December 31, 2019 was $11.2 million. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition. Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the QRC Technologies acquisition had been consummated as of the beginning of fiscal year 2018 (December 30, 2017) (in thousands) is as follows:
|  | 2019 |
|  | (unaudited) |
Pro forma Revenue |  | $ | 3,976,361 |
Pro forma Net Income including noncontrolling interests |  |  | 138,692 |
The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses, and the additional pro forma interest expense related to the borrowings under the credit agreement as of the assumed acquisition date. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented. OGSystems On January 7, 2019, the Company acquired a 100% ownership interest in OGSystems, a privately-owned company, for $292.4 million paid in cash. OGSystems provides geospatial intelligence, big data analytics and threat mitigation for defense and intelligence customers. The Company borrowed $110 million under the Credit Agreement and $150 million on a short-term loan, as described in “Note 12—Debt and Credit Facilities,” to partially fund the acquisition. In connection with this acquisition, the Company recognized $5.4 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2019, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. OGSystems enhances the Company’s artificial intelligence and data analytics expertise with new technologies and solutions. Customers of both companies will benefit from existing, complementary technologies and increased scale, enabling end-to-end solutions under the shared vision of rapid prototyping and agile development. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the purchase price allocation as of the date of acquisition (in thousands):
|  | Amount |
Cash and cash equivalents |  | $ | 5,772 |
Accounts receivable |  |  | 9,904 |
Contract assets |  |  | 9,747 |
Prepaid expenses and other current assets |  |  | 4,307 |
Property and equipment |  |  | 4,085 |
Right of use assets, operating leases |  |  | 8,826 |
Goodwill |  |  | 183,540 |
Intangible assets |  |  | 92,300 |
Other noncurrent assets |  |  | 10 |
Accounts payable |  |  | (5,450 | )
Accrued expenses and other current liabilities |  |  | (7,147 | )
Contract liabilities |  |  | (1,300 | )
Short-term lease liabilities, operating leases |  |  | (805 | )
Income tax payable |  |  | (1,178 | )
Deferred tax liabilities |  |  | (1,195 | )
Long-term lease liabilities, operating leases |  |  | (8,021 | )
Other long-term liabilities |  |  | (1,015 | )
Net assets acquired |  | $ | 292,380 |
Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):
|  | Gross Carrying Amount |  |  | Amortization Period |
|  |  |  |  |  | (in years) |
Customer relationships |  | $ | 57,100 |  |  |  | 5 |
Backlog |  |  | 27,700 |  |  |  | 3 |
Trade name |  |  | 3,800 |  |  |  | 2 |
Non-compete agreements |  |  | 2,400 |  |  |  | 3 |
Developed technologies |  | $ | 1,300 |  |  |  | 3 |
Amortization expense of $21.9 million and $23.8 million related to these intangible assets was recorded for the years ended December 31, 2021 and December 31, 2020, respectively. The entire value of goodwill of $183.5 million was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. Goodwill of $16 million is deductible for tax purposes. The amount of revenue generated by OGSystems and included within consolidated revenues for the year ended December 31, 2019 was $143.4 million. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition. Supplemental Pro Forma Information (Unaudited) Supplemental information of unaudited pro forma operating results assuming the OGSystems acquisition had been consummated as of the beginning of fiscal year 2018 (December 30, 2017) (in thousands) is as follows:
|  | 2019 |
|  | (unaudited) |
Pro forma Revenue |  | $ | 3,956,767 |
Pro forma Net Income including noncontrolling interests |  |  | 134,046 |
The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses, and the additional pro forma interest expense related to the borrowings under the credit agreement as of the assumed acquisition date. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

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