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Acquisitions

12 Months Ended

Jun. 30, 2020

3. Acquisitions

OnCourse Learning

On May 31, 2019, Adtalem completed the acquisition of 100% of the equity interests of OCL for $118.3 million, net of cash of $1.2 million. Adtalem paid $118.4 million for this purchase during the fourth quarter of fiscal year 2019, and funded the purchase with available domestic cash balances and $100 million in borrowings under Adtalem’s revolving credit facility. Adtalem received $0.1 million related to a net working capital adjustment during the second quarter of fiscal year 2020. OCL is a leading provider of compliance training, licensure preparation, continuing education and professional development in the banking and mortgage industries across the U.S. The acquisition furthers Adtalem’s growth strategy into financial services.

The operations of OCL are included in Adtalelm’s Financial Services segment. The results of OCL’s operations have been included in the Consolidated Financial Statements of Adtalem since the date of acquisition.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):


	May 31,
	2019
Current assets	$	5,260
Property and equipment		1,197
Intangible assets		63,100
Goodwill		59,427
Total assets acquired		128,984
Liabilities assumed		9,445
Net assets acquired	$	119,539

Goodwill, which represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired, was all assigned to the Financial Services reporting unit and reportable segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include OCL’s strategic fit into Adtalem’s expanding presence in financial services, the reputation of the OCL brand as a leader in the industry and potential future growth opportunity. Of the $63.1 million of acquired intangible assets, $18.4 million was assigned to trade names, which has been determined not to be subject to amortization. The remaining acquired intangible assets were determined to be subject to amortization with an average useful life of approximately nine years. The values and estimated useful lives by asset type at the date of acquisition are as follows (in thousands):


	May 31, 2019
	Value		Estimated
	Assigned		Useful Life
Customer relationships	$	26,400	11 years
Curriculum		11,600	6 years
Course delivery technology		6,700	5 years

The most significant identified intangible asset, customer relationships, was valued using the multi-period excess earnings method under the income approach. We applied judgment which involved the use of significant assumptions with respect to the discount rate and the terminal growth rate.

There is no proforma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.

EduPristine

On February 5, 2018, Adtalem completed the acquisition of a majority interest in EduPristine. Under the terms of the agreement, Adtalem agreed to pay approximately $3.2 million in cash, in exchange for stock of EduPristine, increasing Adtalem’s ownership share from 36% to 64%. This ownership percentage has increased to 71% after subsequent additional equity investments. EduPristine is a financial services provider in India in the areas of finance, accounting, and analytics. The acquisition furthers Adtalem’s global growth strategy into financial services.

The operations of EduPristine are included in Adtalem’s Financial Services segment. Prior to the February 5, 2018 investment, Adtalem accounted for its ownership interest in EduPristine under the equity method of accounting for investments. The results of EduPristine’s operations have been fully consolidated in the Consolidated Financial Statements of Adtalem since the February 5, 2018 acquisition date. The fair value of Adtalem’s equity investment immediately prior to the majority interest investment was $4.1 million, which was based on a discounted cash flow analysis. The $4.1 million noncontrolling interest recorded on the acquisition date was also derived using the same discounted cash flow analysis. In the third quarter of fiscal year 2018, Adtalem recorded a $1.2 million gain on its previous equity investment.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition of Adtalem’s majority interest in EduPristine (in thousands):


	February 5,
	2018
Current assets	$	866
Property and equipment		239
Other long-term assets		69
Intangible assets		1,380
Goodwill		11,527
Total assets acquired		14,081
Liabilities assumed		2,715
Net assets acquired	$	11,366

Goodwill, which represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired, was assigned to the Financial Services reporting unit and reporting segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include EduPristine’s strategic fit into Adtalem’s expanding presence in financial services and the acquired assembled workforce. None of the goodwill acquired is expected to be deductible for income tax purposes. The $1.4 million of acquired intangible assets was assigned to trade names. None of the acquired intangible assets were determined to be subject to amortization.

There is no proforma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.