On August 16, 2024, the Company acquired a 100% ownership interest in BlackSignal Technologies, LLC, ("BlackSignal") a privately-owned company, for $203.8 million from cash on hand. Headquartered in Chantilly, Virginia, BlackSignal is a next-generation digital signal processing, electronic warfare, and cyber security provider built to counter near peer threats. Parsons believes that the acquisition will expand Parsons' customer base across the Department of Defense and Intelligence Community and significantly strengthen Parsons' positioning within cyber warfare, while adding new capabilities in the counterspace radio frequency domain. In connection with this acquisition, the Company recognized $2.5 million and $2.8 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the three and nine months ended September 30, 2024, respectively, 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 based on the purchase price allocation as of the date of acquisition (in thousands):


	Amount
Cash and cash equivalents	$	4,917
Accounts receivable		5,171
Contract assets		3,209
Income taxes receivable		234
Prepaid expenses and other current assets		433
Right of use assets, operating leases		3,032
Property and Equipment		997
Goodwill		139,394
Intangible assets		73,200
Other assets		145
Accounts payable		(951	)
Accrued expenses and other current liabilities		(4,793	)
Short-term lease liabilities, operating leases		(593	)
Deferred income taxes		(17,978	)
Long-term lease liabilities, operating leases		(2,651	)
Net assets acquired	$	203,766

Of the total purchase price, the following values were preliminarily assigned to intangible assets (in thousands, except for years):


	Gross Carrying Amount		Amortization Period
			(in years)
Customer relationships	$	33,000	14
Backlog		30,400	3
Developed technologies		4,900	5
Non-compete agreements		3,900	3
Other	$	1,000	1

Amortization expense of $2.1 million, related to these intangible assets, was recorded for the three and nine months ended September 30, 2024. The entire value of goodwill was assigned to the Federal Solutions segment and represents synergies expected to be realized from this business combination. $14.3 million of goodwill is deductible for tax purposes.

The amount of revenue generated by BlackSignal and included within consolidated revenue is $6.7 million for the three and nine months ended September 30, 2024. 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 information of unaudited pro forma operating results assuming the BlackSignal acquisition had been consummated as of the beginning of fiscal year 2023 (in thousands) is as follows:


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Pro forma Revenue	$	1,816,364	$	1,427,661	$	5,048,235	$	3,975,624
Pro forma Net Income including noncontrolling interests		85,937		53,798		65,618		130,233

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, employee retention, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses as of the assumed acquisition date. This supplemental pro forma information has been prepared for informational 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.

On October 31, 2023, the Company entered into a Membership Interest Purchase Agreement to acquire a 100% ownership interest in I.S. Engineers, LLC (“I.S. Engineers”), a privately-owned company, for $12.2 million in cash. Headquartered in Texas, I.S. Engineers provides full service consulting specializing in transportation engineering, including roads and highways, and program management. 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, 2023, 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 $11.9 million entirely to goodwill. The entire value of goodwill was assigned to the Critical Infrastructure segment and represents synergies expected to be realized from this business combination. No goodwill is deductible for income tax purposes.

On August 23, 2023, the Company acquired a 100% ownership interest in Sealing Technologies, Inc (“SealingTech”), a privately-owned company, for $176.0 million in cash and up to an additional $25 million in the event an earn out revenue target is exceeded. The Company borrowed $175 million under the Credit Agreement to fund the acquisition. Headquartered in Maryland, SealingTech expands Parsons’ customer base across the Department of Defense and Intelligence Community, and further enhances the Company’s capabilities in defensive cyber operations; integrated mission-solutions powered by artificial intelligence (AI) and machine learning (ML); edge computing and edge access modernization; critical infrastructure protection; and secure data management. In connection with this acquisition,

the Company recognized $3.3 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the three and nine months ended September 30, 2023, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition.

The Company has agreed to pay the selling shareholders up to an additional $25 million in the event an earn out revenue target of $110 million is exceeded during the fiscal year ended December 31, 2024. The earn out payment due and payable by the Company to the selling shareholders shall be equal to (i) five-tenths (0.5), multiplied by (ii) the difference of (A) the actual earn out revenue minus (B) the earn out revenue target; provided, however, that in no event shall the earn out payment exceed $25 million. In the event that the earn out revenue is less than or equal to the earn out revenue target, the earn out payment shall be zero. The earn out payment, if any, shall be paid by the Company to the selling shareholders within 15 days following the date the earn out statement becomes final and binding on both parties. The fair value of the earn out (contingent consideration in the table below) was calculated using a Black-Scholes model. See “Note 16—Fair Value of Financial Instruments” for further information on how the fair value of contingent consideration is determined.

The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands):


	Amount
Cash paid at closing	$	176,028
Fair value of contingent consideration to be achieved		3,231
Total purchase price	$	179,259

The estimated fair value of the SealingTech contingent consideration as of September 30, 2024 was $4.1 million, a $1.8 million increase from the estimated fair value as of December 31, 2023. Changes in the estimated fair value are recorded to "other income (expense), net" in the consolidated financial statements.

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	$	8,133
Accounts receivable		17,889
Contract assets		2,946
Prepaid expenses and other current assets		1,379
Property and equipment		2,025
Right of use assets, operating leases		1,836
Deferred tax assets		357
Goodwill		90,593
Intangible assets		75,000
Accounts payable		(15,987	)
Accrued expenses and other current liabilities		(2,408	)
Contract liabilities		(668	)
Short-term lease liabilities, operating leases		(418	)
Long-term lease liabilities, operating leases		(1,418	)
Net assets acquired	$	179,259

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	$	40,000	14
Backlog		26,000	3
Developed technologies		8,000	3
Other	$	1,000	1

Amortization expense of $3.2 million and $9.8 million related to these intangible assets was recorded for the three and nine months ended September 30, 2024, respectively and $1.5 million for the three and nine months ended September 30, 2023. The entire value of goodwill was assigned to the Federal Solutions segment and represents synergies expected to be realized from this business combination. The entire value of goodwill is deductible for tax purposes.

The amount of revenue generated by SealingTech and included within consolidated revenue is $40.1 million and $74.0 million for the three and nine months ended September 30, 2024, respectively and $18.4 million for the three and nine months ended September 30, 2023. 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 information of unaudited pro forma operating results assuming the SealingTech acquisition had been consummated as of the beginning of fiscal year 2022 (in thousands) is as follows:


	Three Months Ended		Nine Months Ended
	September 30, 2023		September 30, 2023
Pro forma Revenue	$	1,450,376	$	4,030,873
Pro forma Net Income including noncontrolling interests		65,350		158,775

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, employee retention, the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses, employee retention, 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 informational 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.

On April 13, 2023, the Company entered into a merger agreement to acquire a 100% ownership interest in IPKeys Power Partners (“IPKeys”), a privately-owned company, for $43.0 million in cash. The merger brings IPKeys' established customer base, expanding Parsons' presence in two rapidly growing end markets: grid modernization and cyber resiliency for critical infrastructure. Headquartered in Tinton Falls, New Jersey, IPKeys is a trusted provider of enterprise software platform solutions that is actively delivering cyber and operational security to hundreds of electric, water, and gas utilities across North America. The acquisition was entirely funded by cash on-hand. In connection with this acquisition, the Company recognized $0.1 million and $0.6 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the three and nine months ended September 30, 2023,

respectively, 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 based on the purchase price allocation as of the date of acquisition (in thousands):


	Amount
Cash and cash equivalents	$	126
Accounts receivable		3,937
Contract assets		834
Prepaid expenses and other current assets		455
Property and equipment		86
Right of use assets, operating leases		1,105
Other noncurrent assets		152
Goodwill		22,407
Intangible assets		23,000
Accounts payable		(541	)
Accrued expenses and other current liabilities		(1,768	)
Contract liabilities		(1,936	)
Short-term lease liabilities, operating leases		(343	)
Deferred tax liabilities		(3,713	)
Long-term lease liabilities, operating leases		(762	)
Net assets acquired	$	43,039

Of the total purchase price, the following values were assigned to intangible assets (in thousands, except for years):

(1) The acquired business is a SaaS commercial business. Backlog for this type of business is included as customer relationships.

Amortization expense of $0.4 million and $1.2 million related to these intangible assets was recorded for the three and nine months ended September 30, 2024, respectively and $0.5 million and $0.9 million for the three and nine months ended September 30, 2023, respectively. The entire value of goodwill was assigned to the Critical Infrastructure segment and represents synergies expected to be realized from this business combination. $0.9 million of goodwill is deductible for tax purposes.

The amount of revenue generated by IPKeys and included within consolidated revenue is $3.5 million and $6.1 million for the three and nine months ended September 30, 2023, respectively. 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 information of unaudited pro forma operating results assuming the IPKeys acquisition had been consummated as of the beginning of fiscal year 2022 (in thousands) is as follows:


	Three Months Ended		Nine Months Ended
	September 30, 2023		September 30, 2023
Pro forma Revenue	$	1,418,571	$	3,951,378
Pro forma Net Income including noncontrolling interests		60,455		152,258

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 informational 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.

Gross
Carrying
Amount

Amortization
Period

(in years)

Customer relationships (1)

Developed technologies