Acquisitions

12 Months Ended

Dec. 31, 2021

Earth Class Mail, Inc.

In November 2021, we acquired all of the outstanding equity interests in Earth Class Mail, Inc., or Earth Class Mail, a company that provides virtual mailbox solutions for small businesses, in line with our strategy to scale our existing business through building in-house adjacencies. The total cash paid was $61.5 million, inclusive of $0.4 million of buyer costs, which resulted in net purchase price of $61.1 million. The cash amount was paid at closing and funded by our available cash on hand.

The following table summarizes the preliminary purchase price allocation to the fair value of assets and liabilities acquired at the date of acquisition:


	Amount (in thousands)		Estimated Useful life
Goodwill	$	48,515	—
Customer relationships	10,603		6 years
Developed technology	5,418		5 years
Trade names	179		26 months
Property and equipment	267		3 - 5 years
Deferred tax liability	(3,087)		—
Other liabilities	(787)		—
Total purchase consideration	$	61,108

Intangible assets acquired from Earth Class Mail included customer relationships of $10.6 million, developed technology of $5.4 million and trade names of $0.2 million, which are being amortized over their estimated useful life using the straight-line method. To determine the estimated fair value of intangible assets acquired, we engaged a third-party valuation specialist to assist us. All estimates, key assumptions, and forecasts were either provided by, or reviewed by us. While we chose to utilize a third-party valuation specialist for assistance, the fair value analysis and related valuations reflect our conclusions and not those of any third party. Determining the fair value of assets acquired and liabilities assumed required us to make judgments and estimates, including the selection of valuation methodologies, estimates of cash flows, the rate of customer subscription non-renewals, discount rates, the estimated level of effort and related costs of reproducing or replacing the assets acquired, and selection of comparable companies.

Goodwill of $48.5 million arising from the acquisition consists largely of the assembled workforce and synergies expected from combining Earth Class Mail into our operations. The acquired goodwill is not expected to be deductible for tax purposes. Acquisition-related costs, including legal, regulatory, and consulting costs amounted to $1.4 million and are included within general and administrative expenses in our consolidated statement of operations.

The revenue and earnings of the acquired business have been included in our results since the acquisition date and are not material to the our consolidated financial results. Pro forma revenues and results of operations for this acquisition have not been presented as the impact on the our consolidated financial statements would be immaterial.

Purely Solutions, LLC

In October 2020, we entered into a membership interest purchase agreement with Purely Solutions, LLC, or Pure, in which we acquired 100% of the membership interest as part of our plans to offer tax services. Pure provides tax preparation, bookkeeping and outsourced payroll services.

The total fair value of the consideration for the acquisition was $2.3 million. Of the total consideration, $1.0 million was paid in cash on the acquisition date, with $0.5 million and $0.8 million to be paid in cash within six and eighteen months, respectively, from the acquisition date based upon certain earnout metrics being achieved including hiring targets and customer experience metrics. In 2021 we paid out $0.5 million upon the first earnout metrics being achieved. At December 31, 2021, we have classified the remaining contingent consideration in accrued expenses and other current liabilities in the accompanying consolidated balance sheet.

Intangible assets acquired from Pure included customer relationships of $0.6 million, which are being amortized over their estimated useful life of three years using the straight-line method. The goodwill of $1.6 million arising from the acquisition consists largely of the assembled workforce and synergies expected from combining Pure into our operations. The acquired goodwill is not expected to be deductible for tax purposes.