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Acquisitions

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

During the three and six months ended June 30, 2022, the Company completed the acquisition of 100% of the ownership interests in a title insurance and escrow settlement services company and acquired the assets of a a small real estate brokerage. The purpose of these acquisitions was to expand the Company’s title and escrow offerings and to expand its existing brokerage business in key domestic markets. The Company has accounted for these acquisitions as business combinations.

Total Consideration

The total consideration for acquisitions completed during the three and six months ended June 30, 2022 comprised $12.1 million of cash, net of cash acquired, $0.8 million in Class A common stock of the Company and up to $3.6 million of additional cash that may be paid contingent on certain earnings-based targets being met through 2029. Future cash payments were recorded as Accrued expenses and other current liabilities and Other non-current liabilities in the condensed consolidated balance sheets.

The fair value of the assets acquired and the liabilities assumed primarily resulted in the recognition of: customer relationships of $8.1 million; trademark intangible assets of $1.1 million; $1.0 million of other current and non-current assets; and $2.5 million of other current and non-current liabilities. The excess of the purchase price over the fair value of the acquired net assets was recorded as goodwill of $8.8 million. Acquired intangible assets are being amortized over their estimated useful lives of approximately 3 to 5 years.

None of the goodwill recorded during the six months ended June 30, 2022 is deductible for tax purposes. The amount of tax-deductible goodwill may increase in the future to approximately $2.6 million dependent on the payment of certain holdbacks and acquisition related compensation arrangements. These amounts are not expected to have an impact on the income tax provision while the Company maintains a full valuation allowance on its U.S. deferred tax assets.

The Company has recorded the preliminary purchase price allocation as of the acquisition dates and expects to finalize its analysis within the measurement period (up to one year from the acquisition date) of the respective transaction. Any adjustments during the measurement period would have a corresponding offset to goodwill. Upon conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments are recorded to the consolidated statements of operations.

Pro forma revenue and earnings for 2022 acquisitions have not been presented because they are not material to the Company’s consolidated revenue and results of operations, either individually or in the aggregate.

Contingent Consideration

Contingent consideration represents obligations of the Company to transfer cash and common stock to the sellers of certain acquired businesses in the event that certain targets and milestones are met. Approximately $8.7 million of the obligations as of June 30, 2022 are fixed in value. As of June 30, 2022, the undiscounted maximum payment under these arrangements was $21.7 million. Changes in contingent consideration measured at fair value on a recurring basis were as follows (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Opening balance	$	22.8	$	28.0	$	24.4	$	39.8
Acquisitions	3.6		2.7		3.6		4.7
Payments and issuances	(4.0)		(0.4)		(6.0)		(11.0)
Fair value (gains) losses included in net loss	(0.7)		2.7		(0.3)		(0.5)
Closing balance	$	21.7	$	33.0	$	21.7	$	33.0

Other Acquisition Related Compensation In connection with the Company’s acquisitions, certain amounts paid or to be paid to selling shareholders are subject to clawback and forfeiture dependent on certain employees and agents providing continued service to the Company. These retention-based payments are accounted for as compensation for future services and the Company recognizes the expenses over the service period. As of June 30, 2022, the Company expects to pay up to an additional $43.1 million in future compensation to such selling shareholders in connection with these arrangements. For the three months ended June 30, 2022 and 2021, the Company recognized $3.7 million and $7.2 million, respectively, and for the six months ended June 30, 2022 and 2021, the Company recognized $11.4 million and $11.4 million, respectively, in compensation expense within Operations and support in the condensed consolidated statements of operations related to these arrangements.