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Acquisitions (Notes)
 6 Months Ended
Mar. 31, 2016
Acquisitions [Abstract]  
Acquisitions [Text Block]
Acquisitions

On February 9, 2016, we entered into an agreement to acquire substantially all of the assets of BrokenMyth Studios, LLC (BMS), a New York-based full production studio that offers a variety of services, including system architecture design, application and website development, interactive media development and digital technical training for diesel, medical, and industrial equipment companies.
The cash purchase price for this transaction was $1.5 million, and the acquisition includes potential contingent consideration payments in the future. The payment of the contingent consideration, which has a maximum value of $0.9 million, is based upon BMS’s achievement of certain operating income metrics over the three-year period following the date of acquisition. On the acquisition date, we estimated the fair value of the contingent consideration to be $0.2 million using a discounted cash flow valuation method encompassing unobservable inputs, including projected operating results for the performance period and the discount rate applied.
We incurred transaction costs of less than $0.1 million for this acquisition, which are included within selling, general, and administrative expenses on our condensed consolidated statement of comprehensive income (loss). We accounted for the acquisition as a business combination and allocated the purchase price to the assets acquired at fair value as summarized below:
 
 
Purchase Price Allocation
 
Useful Life (Years)
BMS brand
 
$
488

 
5
Work in process
 
224

 
0.25
Customer relationships
 
250

 
5
Goodwill
 
783

 
Indefinite
Total assets acquired
 
1,745

 
 
Less: Fair value of contingent consideration
 
(245
)
 
 
Cash paid for acquisition (purchase price)
 
$
1,500

 
 

We determined the fair value of the assets acquired based on assumptions that reasonable market participants would use while employing the concept of highest and best use of each respective item. No liabilities were assumed in this transaction. The BMS brand intangible was valued using the relief-from-royalty method, which represents the benefit of owning the intangible as opposed to paying royalties for its use. The remaining intangibles were valued using income or replacement cost approaches. We determined that the acquired intangibles are finite-lived and we are amortizing them on a straight-line basis that reflects the pattern in which we expect the economic benefits of such assets to be consumed. Additionally, we recorded approximately $0.8 million in goodwill as a result of this acquisition, which is expected to be deductible for tax purposes. The goodwill is primarily attributable to future earnings potential and to other intangibles that do not qualify for separate recognition, such as assembled workforce. We have included BMS in our Other reportable segment.
The operating results of BMS are included in our condensed consolidated financial statements from the date of the acquisition forward. We have not provided pro forma information or the revenue and operating results of the acquired entity because its results of operations are not material to our condensed consolidated results of operations.