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Business Combinations | 9 Months Ended
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Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Note 4 - Business Combinations 2022 Acquisitions In April 2022, the Company acquired all the outstanding equity interests of Comparably, Inc. (“Comparably”) and acquired substantially all the assets and certain specified liabilities of Dogpatch Advisors, LLC (“Dogpatch”) (collectively, the “2022 Acquired Companies”) for a total purchase consideration of $150.6 million in cash and $10.0 million in convertible notes receivable. As part of the acquisitions, the Company issued 448,740 restricted stock units at a total grant date fair value of $26.8 million and could be required to issue additional equity awards up to a maximum value of $3.7 million based on the attainment of certain revenue thresholds and the continued employment of acquired employees. The acquisition of Comparably provides ZoomInfo with unique proprietary data to further build TalentOS into a best-in-class talent platform by enriching recruiter search options and providing recruiters with access to millions of quality candidates and employer brand solutions. We acquired Dogpatch Advisors to launch ZoomInfo Labs, a new go-to-market thought leadership team, driving go-to-market data analysis, product enhancements and strategy for our enterprise customers. Dogpatch is a go-to-market consultancy with expertise in scaling revenue teams and building modern sales and marketing systems. The purchase accounting for the 2022 Acquired Companies transactions is not yet finalized. The Company has included the financial results of the 2022 Acquired Companies in the consolidated financial statements from each date of acquisition. Due to the integration of the 2022 Acquired Companies into the operations of ZoomInfo, the Company cannot practicably determine the contribution of the 2022 Acquired Companies to consolidated net earnings. Transaction costs associated with each acquisition were not material. The acquisition date fair value of the total consideration transferred was comprised of the following (in millions):
| Preliminary Fair Value at Acquisition Date |  | Measurement Period Adjustments |  | Adjusted Fair Value at Acquisition Date
Cash | $ | 150.5 |  |  | $ | 0.1 |  |  | $ | 150.6 |
Conversion of Note Receivable | 10.0 |  |  | — |  |  | 10.0 |
Total purchase consideration | $ | 160.5 |  |  | $ | 0.1 |  |  | $ | 160.6 |
The following table summarizes the aggregate fair values of the assets acquired and liabilities assumed, as of the dates of the acquisition for the 2022 Acquired Companies (in millions):
| Preliminary Fair Value at Acquisition Date |  | Measurement Period Adjustments |  | Adjusted Fair Value at Acquisition Date
Cash and cash equivalents | $ | 14.8 |  |  | $ | — |  |  | $ | 14.8 |
Accounts receivable | 2.3 |  |  | — |  |  | 2.3 |
Prepaid expenses and other assets | 0.3 |  |  | — |  |  | 0.3 |
Intangible assets | 34.8 |  |  | — |  |  | 34.8 |
Accounts payable and other liabilities | (0.9) |  |  | (0.4) |  |  | (1.3) |
Unearned revenue | (6.8) |  |  | — |  |  | (6.8) |
Deferred tax liabilities | (6.5) |  |  | — |  |  | (6.5) |
Total identifiable net assets acquired | 38.0 |  |  | (0.4) |  |  | 37.6 |
Goodwill | 122.5 |  |  | 0.5 |  |  | 123.0 |
Total consideration | 160.5 |  |  | 0.1 |  |  | 160.6 |
Cash Acquired | (14.8) |  |  | — |  |  | (14.8) |
Cash paid for acquisitions, net of cash acquired | $ | 145.7 |  |  | $ | 0.1 |  |  | $ | 145.8 |
Cash paid (refunds received) for 2021 acquisitions in 2022 (see "2021 Acquisitions") |  |  |  |  | $ | (2.1) |
Total cash paid for acquisitions in 2022 |  |  |  |  | $ | 143.7 |
The excess of purchase consideration over the fair value of net tangible and intangible assets acquired was recorded as goodwill. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions. The fair values of assets acquired and liabilities assumed in the Comparably acquisition may be subject to change as additional information is received regarding working capital balances at the acquisition date, and the values of the identifiable intangible assets. The following table sets forth the components of identifiable intangible assets acquired and the estimated useful lives as of the dates of acquisition (in millions):
| Preliminary Fair Value at Acquisition Date |  | Measurement Period Adjustments |  | Adjusted Fair Value at Acquisition Date |  | Weighted Average Useful Life
Existing Technology | $ | 27.6 |  |  | $ | — |  |  | $ | 27.6 |  |  | 5.8 years
Customer Relationships | 3.4 |  |  | — |  |  | 3.4 |  |  | 9.0 years
Trade name / Trademarks | 3.8 |  |  | — |  |  | 3.8 |  |  | 8.0 years
| $ | 34.8 |  |  | $ | — |  |  | $ | 34.8 |  |  |
Developed technology represents the fair value of the technology portfolios acquired. The goodwill is primarily attributed to the expanded market opportunities when integrating technology with the Company’s technology and the assembled workforce. All goodwill acquired in the nine months ended September 30, 2022 is expected to be deductible for U.S. income tax purposes. Pro forma information related to the acquisitions has not been presented as the impact was not material to the Company’s financial results. 2021 Acquisitions During the twelve months ended December 31, 2021, the Company consummated the following acquisitions (collectively, “2021 Acquired Companies”) which have been accounted for as business combinations under ASC Topic 805. •In June 2021, the Company acquired all of the outstanding equity interests of Insent, Inc. (“Insent”) for total purchase consideration of $34.0 million, consisting of $32.9 million in cash and estimated deferred purchase consideration of $1.1 million. The purchase accounting for this transaction has been finalized. As part of the acquisition, the Company issued 36,118 RSUs, at a total grant date fair value of $2.4 million, and agreed to pay $2.0 million of incentive compensation to acquired employees, subject to continued employment, to be recognized in the post-combination periods. •In July 2021, the Company acquired substantially all of the net assets of AffectLayer, Inc. (d/b/a Chorus.ai) (“Chorus.ai”). At the time of purchase, the Company reserved a portion of cash transferred to settle the Seller’s estimated tax liability arising from the sale of Chorus.ai’s net assets. The Seller has since completed the final determination of its tax liability, resulting in a refund to the Company of approximately $33.9 million in cash, which was received in the fourth quarter of 2021 and previously included in the Prepaid expenses and other current assets balance. After adjustment for this refund, purchase consideration transferred for the assets of Chorus.ai is $547.4 million in cash. The total purchase consideration includes $31.8 million attributable to certain unvested options issued by Chorus.ai that were accelerated in contemplation of the acquisition by ZoomInfo. The purchase accounting for this transaction has been finalized. As part of the acquisition, the Company issued 572,921 RSUs that replaced previously unvested equity in Chorus.ai or were issued as incremental incentive grants at a total grant date fair value of $30.3 million, and agreed to pay $6.0 million of compensation to acquired employees, subject to continued employment, to be recognized in the post-combination periods. •In September 2021, the Company acquired substantially all of the net assets of RingLead, Inc. (“RingLead”) for total purchase consideration of $116.0 million, consisting of $114.9 million in cash and estimated deferred purchase consideration of $1.1 million. The purchase accounting for this transaction has been finalized. As part of the acquisition, the Company issued 42,854 replacement RSUs, at a total grant date fair value of $2.8 million and agreed to pay $3.7 million of incentive compensation to acquired employees, subject to continued employment, to be recognized in the post-combination periods. The Company has included the financial results of the 2021 Acquired Companies in the consolidated financial statements from each date of acquisition. During the twelve months ended December 31, 2021, the 2021 Acquired Companies contributed $13.2 million to revenue. Due to the integration of the 2021 Acquired Companies into the operations of ZoomInfo, the Company cannot practicably determine the contribution of the 2021 Acquired Companies to consolidated net earnings. Transaction costs associated with each acquisition were not material. The acquisition date fair value of the total consideration transferred was comprised of the following (in millions):
| Preliminary Fair Value at Acquisition Date |  | Measurement Period Adjustments |  | Adjusted Fair Value at Acquisition Date
Cash | $ | 697.7 |  |  | $ | (2.5) |  |  | $ | 695.2 |
Deferred purchase consideration | 2.2 |  |  | — |  |  | 2.2 |
Total purchase consideration | $ | 699.9 |  |  | $ | (2.5) |  |  | $ | 697.4 |
The following table summarizes the aggregate fair values of the assets acquired and liabilities assumed, as of the dates of the acquisition for the 2021 Acquired Companies, as adjusted in the fourth quarter of 2021 and the first quarter of 2022 (in millions):
| Preliminary Fair Value at Acquisition Date |  | Measurement Period Adjustments |  | Adjusted Fair Value at Acquisition Date
Cash and cash equivalents | $ | 13.9 |  |  | $ | — |  |  | $ | 13.9 |
Accounts receivable | 4.3 |  |  | (0.1) |  |  | 4.2 |
Prepaid expenses and other assets | 2.8 |  |  | (0.1) |  |  | 2.7 |
Intangible assets | 120.7 |  |  | 0.2 |  |  | 120.9 |
Accounts payable and other liabilities | (4.1) |  |  | (0.5) |  |  | (4.6) |
Unearned revenue | (10.2) |  |  | — |  |  | (10.2) |
Deferred tax liabilities | (2.7) |  |  | — |  |  | (2.7) |
Total identifiable net assets acquired | 124.7 |  |  | (0.5) |  |  | 124.2 |
Goodwill | 575.2 |  |  | (2.0) |  |  | 573.2 |
Total consideration | 699.9 |  |  | (2.5) |  |  | 697.4 |
Cash refund from Chorus.ai acquisition | 33.9 |  |  | (33.9) |  |  | — |
Deferred consideration | (2.2) |  |  | — |  |  | (2.2) |
Accruals from adjustments to working capital balances | (0.5) |  |  | 0.6 |  |  | 0.1 |
Accruals from adjustments to tax liabilities | — |  |  | 0.4 |  |  | 0.4 |
Cash acquired | (13.9) |  |  | — |  |  | (13.9) |
Cash paid for acquisitions, net of cash acquired | $ | 717.2 |  |  | $ | (35.4) |  |  | $ | 681.8 |
Cash paid (received) for acquisitions in 2021 |  |  |  |  | $ | 683.9 |
Cash paid (received) for acquisitions in 2022 |  |  |  |  | $ | (2.1) |
The excess of purchase consideration over the fair value of net tangible and intangible assets acquired was recorded as goodwill. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions. The following table sets forth the components of identifiable intangible assets acquired and the estimated useful lives as of the dates of acquisition (in millions):
| Preliminary Fair Value at Acquisition Date |  | Measurement Period Adjustments |  | Adjusted Fair Value at Acquisition Date |  | Weighted Average Useful Life
Brand portfolio | $ | 1.1 |  |  | $ | — |  |  | $ | 1.1 |  |  | 2.0 years
Developed technology | 107.5 |  |  | 0.2 |  |  | 107.7 |  |  | 6.1 years
Customer relationships | 12.1 |  |  | — |  |  | 12.1 |  |  | 7.7 years
Total intangible assets | $ | 120.7 |  |  | $ | 0.2 |  |  | $ | 120.9 |  |  |
Developed technology represents the fair value of the technology portfolios acquired. The goodwill is primarily attributed to the expanded market opportunities when integrating technology with the Company’s technology and the assembled workforce. All goodwill acquired in the twelve months ended December 31, 2021 is expected to be deductible for U.S. income tax purposes. Unaudited Pro Forma Financial Information for the 2021 Acquisitions The following table presents the unaudited pro forma results for the years ended December 31, 2021 and 2020. The unaudited pro forma financial information combines the results of operations of the 2021 Acquired Companies and ZoomInfo as though each of the acquisitions had been completed on January 1, 2020. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at such time. The unaudited pro forma results presented below primarily include adjustments for amortization of identifiable intangible assets, the valuation of deferred revenue assumed in the acquisitions (“the deferred revenue write-down”), interest expense, aggregate transaction expenses and transaction success bonuses of $12.6 million, equity-based compensation, and related tax effects of the adjustments:
| Year Ended December 31,
(in millions) | 2021 |  | 2020
Revenue | $ | 764.0 |  |  | $ | 490.6 |
Net income (loss) | $ | 84.9 |  |  | $ | (78.8) |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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