Business Combinations

On February 8, 2019, the Company acquired all outstanding stock of JN Projects, Inc. (d/b/a HelloSign) ("HelloSign"), which provides an e-signature and document workflow platform. The acquisition of HelloSign expands the Company's content collaboration capabilities to include additional business-critical workflows. The results of HelloSign operations have been included in the Company’s consolidated results of operations since the date of acquisition.

The purchase consideration transferred consisted of the following:



	Purchase consideration
Cash paid to common and preferred stockholders and vested option holders	$	175.2
Transaction costs paid by Dropbox on behalf of HelloSign	2.4
Fair value of assumed HelloSign options attributable to pre-combination services ⁽¹⁾	0.8
Purchase price adjustments	(0.8		)
Total purchase consideration	$	177.6

⁽¹⁾The fair value of option assumed were based upon the Black-Scholes option-pricing model.

In addition to the total purchase consideration above, the Company has compensation agreements with key HelloSign personnel consisting of $48.5 million in future cash payments subject to on-going employee service. The related expense will be recognized within research and development expenses over the required service period of three years, while the related payments will begin in the first quarter of 2020 if the requisite service is provided.

The purchase consideration was preliminarily allocated to the tangible and intangible assets and liabilities acquired as of the acquisition date, with the excess recorded to goodwill as shown below. The fair value of assets and liabilities acquired may change as additional information is received during the measurement period. The measurement period will end no later than one-year from the acquisition date.



Assets acquired:
Cash and cash equivalents	$	5.5
Short-term investments	7.8
Acquisition-related intangible assets	44.6
Accounts receivable, prepaid and other assets	5.0
Total assets acquired	$	62.9

Liabilities assumed:
Accounts payable, accrued and other liabilities	$	6.3
Deferred revenue	4.8
Deferred tax liability	6.9
Total liabilities assumed	18.0
Net assets acquired, excluding goodwill	44.9
Total purchase consideration	177.6
Estimated goodwill ⁽²⁾	$	132.7

⁽²⁾ The goodwill recognized was primarily attributable to the opportunity to expand the user base of the Company's platform. The goodwill is not deductible for U.S. federal income tax purposes.

The fair value of the separately identifiable finite-lived intangible assets acquired and estimated weighted average useful lives are as follows:



	Estimated fair values		Estimated weighted average useful lives (In years)
Customer relationships	$	20.5	4.9
Developed technology	19.6		5.0
Trade name	4.5		5.0
Total acquisition-related intangible assets	$	44.6

The fair values of the acquisition-related intangibles were determined using the following methodologies: the multi-period excess earnings method, replacement cost method, and the relief from royalty method, for customer relationships, developed technology, and the trade name, respectively. The valuation model inputs required the application of significant judgment by management. The acquired intangible assets have a total weighted average amortization period of 4.9 years.

One-time acquisition-related diligence costs of $1.0 million were expensed within general and administrative expenses as incurred during the three months ended March 31, 2019.