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Business Combinations | 6 Months Ended
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Jun. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Business Combinations | Business Combinations On April 22, 2024, we completed our acquisition of Wilshire Axiom SM, Wilshire Atlas SM, Wilshire Abacus (“AAA”), and Wilshire iQComposite, which together (the “Wilshire Technology”) comprise the risk and performance analytics solutions businesses of Wilshire Advisors LLC, (“Wilshire”) a leading global financial services firm. Included in the transaction, we acquired the employee base and all customer contracts associated with the Wilshire Technology.Following the acquisition, the Wilshire Technology is co-branded as Clearwater Wilshire Analytics and enables clients to calculate performance and risk attribution, assist with security-level portfolio construction, access high-quality portfolio models, and identify investment opportunities that maximize returns and mitigate risk. The total purchase consideration for the acquisition of the Wilshire Technology was $40.1 million in cash, paid upon completion of the acquisition. In connection with the acquisition, the Company and Wilshire entered into a Transition Services Agreement pursuant to which Wilshire agreed to perform certain services for a period of time with respect to the Company’s use and operation of the Wilshire Technology, and a Master SaaS Agreement for Wilshire to license back the underlying technology for use in their retained business. We expensed acquisition-related costs in the amount of $1.3 million in general and administrative expenses in the three months ended June 30, 2024. We have accounted for this transaction as a business combination and allocated the fair value of the consideration to the assets acquired as well as liabilities assumed, based on their estimated fair values. The excess of the purchase price over the fair values of these identifiable assets and liabilities was recorded as goodwill. The preliminary allocated fair value is summarized as follows (in thousands):
| Fair Value
Accounts receivable | $ | 412 |
Prepaid expenses | 325 |
Intangible assets | 11,700 |
Goodwill | 28,237 |
Deferred revenue | (552) |
Cash paid for acquisition of business | $ | 40,121 |
Goodwill generated from this business combination is primarily attributable to the assembled workforce, expected post-acquisition synergies from integrating the Wilshire Technology into our platform and the expansion of product offerings to our existing global customer base. The goodwill is deductible for income tax purposes. The following table presents details of the preliminary fair values of identified intangible assets acquired (in thousands, except years):
| Fair Value |  | Estimated Useful Life
Developed technology - AAA | $ | 9,100 |  |  | 5 years
Developed technology - iQComposite | 900 |  |  | 6 years
Customer relationships | 1,350 |  |  | 11 years
Trademarks | 350 |  |  | 3 years
Total | $ | 11,700 |  |  |
The identified intangible assets are measured at fair value as Level III in accordance with the fair value hierarchy.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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