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Acquisitions | 9 Months Ended
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Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS | ACQUISITIONS Zenefits On February 15, 2022, the Company acquired all of the shares outstanding of Zenefits, a leading cloud HR platform which provides innovative and intuitive HR, benefits, payroll and employee engagement software purpose-built for small and medium-size businesses. We believe the acquisition of Zenefits and its cloud-based HCM software allows us to diversify our product and service offerings to all SMBs without using a co-employment model, and enables us to dynamically service SMBs throughout their lifecycle and expand the customers we serve. The Company recorded the acquisition using the acquisition method of accounting for business combinations in accordance with ASC 805 and recognized identifiable assets acquired and liabilities assumed at their fair value as of the date of acquisition. We measure goodwill as the excess of the cash and stock consideration transferred, which we also measure at fair value, over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Quarterly Report on Form 10-Q and may change over the measurement period as the analysis of the assets acquired and liabilities assumed is finalized and additional information is received. The measurement period will end no later than one year from the acquisition date. The purchase price was as follows:
(in millions) | Amount |
Cash and stock consideration per agreement | $ | 220 |  |
Closing adjustments | 3 |  |
Total consideration payable | 223 |  |
Less: Unvested Zenefits restricted stock | (14) |  |
Total purchase price | $ | 209 |  |
The purchase price consisted of cash consideration paid of $192 million and 193,221 shares of TriNet common stock with a fair value of $17 million. In accordance with the merger agreement, certain holders of Zenefits stock received cash in lieu of stock. Holders of unvested Zenefits restricted stock will receive their pro-rata share of the consideration, payable in cash quarterly over 18 months, and is generally forfeited if the employee terminates service prior to vesting. This amount will be recorded as G&A expense over the 18-month service period. Acquisition-related costs are recorded as G&A expense for the nine months ended September 30, 2022 and were not material. The following table summarizes the fair value of the net assets acquired and preliminary allocation of the purchase price:
(in millions) | Amount |
Total purchase price | $ | 209 |  |
Asset Acquired: |  |
Cash | $ | 4 |  |
Restricted cash | 5 |  |
Accounts receivable, net | 4 |  |
Intangible assets | 96 |  |
Operating lease right-of-use asset | 9 |  |
Deferred tax asset | 2 |  |
Other assets | 5 |  |
Total assets acquired | 125 |  |
Liabilities Assumed |  |
Accounts payable and other current liabilities | $ | 9 |  |
Deferred revenue | 13 |  |
Operating lease liabilities | 15 |  |
Deferred taxes | 18 |  |
Total liabilities assumed | 55 |  |
Net assets acquired | $ | 70 |  |
Goodwill at acquisition | $ | 139 |  |
Measurement period adjustments | (3) |  |
Goodwill at September 30, 2022 | $ | 136 |  |
Goodwill represents future economic benefits we expect to achieve as a result of the acquisition, including revenue and cost synergies from our complementary business models. The results of Zenefits have been included in our consolidated financial statements since the closing of the acquisition. Pro forma financial information was not presented because the effect of the acquisition was not material to our results of operations and financial condition. The goodwill associated with the acquisition is not deductible for income tax purposes. The intangible assets acquired were as follows:
(in millions) | Amount | Estimated Useful Life |
Acquired technology | $ | 56 |  | 6 years |
Customer relationships | 40 |  | 7 years |
Total intangible assets | $ | 96 |  |  |
Clarus R+D Solutions On September 1, 2022, the Company acquired all of the shares outstanding of Clarus R+D, a provider of technology enabled tax expertise and services to SMBs claiming state and federal R&D tax credits. We believe the acquisition of Clarus R+D and its cloud-based software will allow us to provide additional services to our PEO Services and HCM Cloud Services customers. The Company recorded the acquisition using the acquisition method of accounting for business combinations in accordance with ASC 805 and recognized identifiable assets acquired and liabilities assumed at their fair value as of the date of acquisition. We measure goodwill as the excess of the cash and stock consideration transferred, which we also measure at fair value, over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Quarterly Report on Form 10-Q and may change over the measurement period as the analysis of the assets acquired and liabilities assumed is finalized and additional information is received. The measurement period will end no later than one year from the acquisition date. The total purchase price consisted of cash consideration paid of $48 million. Acquisition-related costs are recorded as G&A expense for the three and nine months ended September 30, 2022 and were not material to our results of operations and financial condition. In connection with the acquisition, we issued an immaterial amount of RSUs to the Clarus employees who are required to provide ongoing services to vest. The following table summarizes the fair value of the net assets acquired and preliminary allocation of the purchase price:
(in millions) | Amount |
Total purchase price | $ | 48 |  |
Asset Acquired: |  |
Cash | $ | 3 |  |
Accounts receivable, net | 3 |  |
Intangible assets | 14 |  |
Total assets acquired | 20 |  |
Liabilities Assumed |  |
Accounts payable and other current liabilities | $ | 1 |  |
Deferred taxes | 3 |  |
Total liabilities assumed | 4 |  |
Net assets acquired | $ | 16 |  |
Goodwill at acquisition | $ | 32 |  |
Goodwill at September 30, 2022 | $ | 32 |  |
Of the total consideration, $4 million remains unremitted as of September 30, 2022. Goodwill represents future economic benefits we expect to achieve as a result of the acquisition, including revenue and cost synergies from our complementary business models. The results of Clarus R+D have been included in our consolidated financial statements since the closing of the acquisition. Pro forma financial information was not presented because the effect of the acquisition was not material to our results of operations and financial condition. The goodwill associated with the acquisition is not deductible for income tax purposes. The intangible assets acquired were as follows:
(in millions) | Amount | Estimated Useful Life |
Acquired technology | $ | 9 |  | 6 years |
Customer relationships | 5 |  | 3 - 5 years |
Total intangible assets | $ | 14 |  |  |

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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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