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ACQUISITION | 3 Months Ended
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Feb. 29, 2024
Business Combination and Asset Acquisition [Abstract] |
ACQUISITION | NOTE 3—ACQUISITIONS: Webhelp Combination Background On September 25, 2023, the Company completed its acquisition (the “Webhelp Combination”) of all of the issued and outstanding capital stock (the “Shares”) of Marnix Lux SA, a public limited liability company (société anonyme) incorporated under the laws of the Grand Duchy of Luxembourg (“Webhelp Parent”) and the parent company of the Webhelp business (“Webhelp”), from the holders thereof (the “Sellers”). The Webhelp Combination was completed pursuant to the terms and conditions of the Share Purchase and Contribution Agreement, dated as of June 12, 2023, as amended by the First Amendment to the Share Purchase and Contribution Agreement, dated as of July 14, 2023 (the “SPA”), by and among Concentrix, OSYRIS S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg and a direct wholly owned subsidiary of Concentrix Corporation (“Purchaser”), Webhelp Parent, the Sellers, and certain representatives of the Sellers. Webhelp is a leading provider of CX solutions, including sales, marketing, and payment services, with significant operations and client relationships in Europe, Latin America, and Africa. Since the closing of the Webhelp Combination, the Company has operated under the trade name “Concentrix + Webhelp” while it transitions Webhelp operations and branding to the Concentrix name. Preliminary purchase price consideration The total preliminary purchase price consideration, net of cash and restricted cash acquired, for the acquisition of Webhelp was $3,774.8 million, which was funded by proceeds from the Company’s August 2023 offering and sale of senior notes, term loan borrowings under the Company’s senior credit facility, the issuance of shares of the Company’s common stock, and cash on hand. See Note 8—Borrowings for a further discussion of the Company’s senior notes, term loan, and senior credit facility. The preliminary purchase price consideration to acquire Webhelp consisted of the following:
Cash consideration for Shares (1) | $ | 529,160 |
Cash consideration for repayment of Webhelp debt and shareholder loan (2) | 1,915,197 |
Total cash consideration | 2,444,357 |
Equity consideration (3) | 1,084,894 |
Earnout shares contingent consideration (4) | 32,919 |
Sellers’ note consideration (5) | 711,830 |
Total consideration transferred | 4,274,000 |
Less: Cash and restricted cash acquired (6) | 499,211 |
Total purchase price consideration | $ | 3,774,789 |
(1) Represents the cash consideration paid, and to be paid, in the aggregate amount of €500,000, as adjusted in accordance with the SPA. (2) Represents the cash consideration paid to repay Webhelp’s outstanding senior loan debt and shareholder loan. (3) Represents the issuance of 14,862 shares of common stock, par value $0.0001 per share, of Concentrix Corporation (the “Concentrix common stock”). (4) Represents the contingent right for the Sellers to earn an additional 750 shares of Concentrix common stock (the “Earnout Shares”). The estimated fair value of this contingent consideration was determined using a Monte-Carlo simulation model. The inputs include the closing price of Concentrix common stock as of the Closing Date, Concentrix-specific historical equity volatility, and the risk-free rate. See further details below. (5) Represents a promissory note issued by Concentrix Corporation in the aggregate principal amount of €700,000 to certain Sellers. See Note 8—Borrowings for a further discussion of this promissory note. (6) Represents the Webhelp cash and restricted cash balance acquired at the Closing Date. The Company granted Sellers the contingent right to earn the Earnout Shares if certain conditions set forth in the SPA occur, including the share price of Concentrix common stock reaching $170.00 per share within seven years from the closing of the Webhelp Combination (the “Closing Date”) (based on daily volume weighted average prices measured over a specified period). Prior to the Closing Date, Concentrix and certain Sellers entered into stock restriction agreements (the “Stock Restriction Agreements”), pursuant to which such Sellers (the “Restricted Stock Participants”) agreed to contribute in kind to the Company, and the Company agreed to receive, certain of the Restricted Stock Participants’ Shares in exchange for the issuance of shares of Concentrix common stock with certain restrictions thereon (the “Restricted Shares”) in lieu of such Sellers’ right to a portion of the Earnout Shares. On the Closing Date, the Company issued approximately 80 Restricted Shares in exchange for certain of the Restricted Stock Participants’ Shares. The Restricted Shares are non-transferable and non-assignable and are not entitled to any dividends or distributions unless and until the restrictions lapse, as set forth in the Stock Restriction Agreements. The Restricted Shares will be automatically cancelled by the Company for no consideration in the event that the restrictions on the Restricted Shares do not lapse. The Restricted Stock Participants have waived any and all rights as a holder of Restricted Shares to vote on any matter submitted to the holders of Concentrix common stock. Preliminary purchase price allocation The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The purchase price was allocated to the assets acquired and liabilities assumed based on management’s estimate of the respective fair values at the date of acquisition. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were the assembled workforce, comprehensive service portfolio delivery capabilities, and strategic benefits that are expected to be realized from the acquisition. None of the goodwill is expected to be deductible for income tax purposes. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date:
| As of
| September 25, 2023
Assets acquired: |
Cash and cash equivalents | $ | 310,313 |
Accounts receivable | 455,218 |
Other current assets (1) | 454,465 |
Property and equipment | 323,606 |
Identifiable intangible assets | 1,984,000 |
Goodwill | 2,098,531 |
Deferred tax assets | 22,541 |
Other assets | 410,085 |
| 6,058,759 |
Liabilities assumed: |
Accounts payable | 67,558 |
Accrued compensation and benefits | 246,450 |
Other accrued liabilities | 576,549 |
Income taxes payable | 72,227 |
Debt (current portion and long-term) | 8,589 |
Deferred tax liabilities | 411,788 |
Other long-term liabilities | 401,598 |
Total liabilities assumed | 1,784,759 |
Total consideration transferred | $ | 4,274,000 |
(1) Includes restricted cash acquired of $188,899. As of February 29, 2024, the purchase price allocation is preliminary. The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (not to exceed twelve months following the acquisition date). The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of identifiable intangible assets acquired, the fair value of certain tangible assets acquired and liabilities assumed, and deferred income taxes. The Company expects to continue to obtain information for the purpose of determining the fair value of the assets acquired and liabilities assumed on the acquisition date throughout the remainder of the measurement period. As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial purchase price allocation. Adjustments were primarily made to cash, goodwill, accrued compensation and benefits, accrued liabilities and deferred income taxes. These measurement period adjustments to the preliminary purchase price allocation during the three months ended February 29, 2024 were not material. The preliminary purchase price allocation includes $1,984,000 of acquired identifiable intangible assets, all of which have finite lives. The fair value of the identifiable intangible assets has been estimated by using the income approach through a discounted cash flow analysis of certain cash flow projections. The cash flow projections are based on forecasts used by the Company to price the Webhelp Combination, and the discount rates applied were benchmarked by referencing the implied rate of return of the Company’s pricing model and the weighted average cost of capital. The intangible assets are being amortized over their estimated useful lives on either a straight-line basis or an accelerated method that reflects the economic benefit of the asset. The determination of the useful lives is based upon various industry studies, historical acquisition experience, economic factors, and future forecasted cash flows of the Company following the acquisition of Webhelp. The preliminary amounts allocated to intangible assets are as follows:
| Gross Carrying Amount |  | Weighted-Average Useful Life |  | Amortization Method
Customer relationships | $ | 1,882,000 |  |  | 15 years |  | Accelerated
Trade name | 102,000 |  |  | 3 years |  | Straight-line
Total | $ | 1,984,000 |  |  |  |  |
Supplemental Pro Forma Information (unaudited) The supplemental pro forma financial information presented below is for illustrative purposes only, does not include the pro forma adjustments that would be required under Regulation S-X for pro forma financial information, is not necessarily indicative of the financial position or results of operations that would have been realized if the combination with Webhelp had been completed on December 1, 2022, does not reflect synergies that might have been achieved, nor is it indicative of future operating results or financial position. The pro forma adjustments are based upon currently available information and certain assumptions that the Company believes are reasonable under the circumstances. The supplemental pro forma financial information reflects pro forma adjustments to present the combined pro forma results of operations as if the combination with Webhelp had occurred on December 1, 2022 to give effect to certain events that the Company believes to be directly attributable to the acquisition. These pro forma adjustments primarily include: •A net increase in amortization expense that would have been recognized due to acquired identifiable intangible assets. •An increase in depreciation expense associated with the step up of fair values of property and equipment assets acquired. •A net increase to interest expense to reflect the additional borrowings of Concentrix incurred in connection with the combination as previously described and the repayment of Webhelp’s historical debt in conjunction with the combination. •The related income tax effects of the adjustments noted above. The supplemental pro forma financial information for the prior period first fiscal quarter ended February 28, 2023 is as follows:
| Three Months Ended
| February 28, 2023
Revenue | $ | 2,362,015 |
Net income | 17,482 |
Acquisition-related and integration expenses In connection with the Webhelp Combination and previous year acquisitions, the Company incurred $30,173 and $5,543 of acquisition-related and integration expenses for the three months ended February 29, 2024 and February 28, 2023, respectively. These expenses primarily include legal and professional services, cash-settled awards, severance and retention payments, and costs associated with lease terminations to integrate the businesses. These acquisition-related and integration expenses were recorded within selling, general and administrative expenses in the consolidated statement of operations.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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