Business Combinations

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

On April 22, 2024, we completed our acquisition of Wilshire AxiomSM, Wilshire AtlasSM, 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.