BUSINESS COMBINATIONS AND ACQUISITIONS OF NONCONTROLLING INTERESTS

2014 Acquisition Activity

The Company acquired six businesses during the year ended December 31, 2014. Business combinations are accounted for using the acquisition method, and the results of acquired businesses are included in the consolidated financial statements beginning on the respective acquisition dates. The fair value of consideration transferred in business combinations is allocated to the tangible and intangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The allocations of the acquisition price for recent acquisitions have been prepared on a preliminary basis, and changes to those allocations may occur as a result of final working capital adjustments and tax return filings. Acquired goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired. The Company paid these premiums for a number of reasons, including growing the Company's merchant and customer base, acquiring assembled workforces, expanding its presence in international markets, expanding and advancing its product offerings and enhancing technology capabilities. The goodwill from these business combinations is generally not deductible for tax purposes.

For the years ended December 31, 2014 and 2013, $3.7 million and $3.2 million of external transaction costs related to business combinations, primarily consisting of legal and advisory fees, are classified within "Acquisition-related expense (benefit), net" on the consolidated statements of operations, respectively. Such costs were not material for the year ended December 31, 2012.

LivingSocial Korea, Inc.

On January 2, 2014, the Company acquired all of the outstanding equity interests of LivingSocial Korea, Inc., a Korean corporation and holding company of Ticket Monster Inc. ("Ticket Monster"). Ticket Monster is an e-commerce company based in the Republic of Korea that connects merchants to consumers by offering goods and services at a discount. The primary purpose of this acquisition was to grow the Company's merchant and customer base and expand its presence in the Korean e-commerce market. The aggregate acquisition-date fair value of the consideration transferred for the Ticket Monster acquisition totaled $259.4 million, which consisted of the following (in thousands):



Cash	$	96,496
Issuance of 13,825,283 shares of Class A common stock	162,862
Total	$	259,358

The fair value of the Class A Common Stock issued as consideration was measured based on the stock price upon closing of the transaction on January 2, 2014.

The following table summarizes the allocation of the aggregate acquisition price of the Ticket Monster acquisition (in thousands):



Cash and cash equivalents	$	24,768
Accounts receivable	17,732
Deferred income taxes	1,264
Prepaid expenses and other current assets	829
Property, equipment and software	5,944
Goodwill	218,692
Intangible assets:⁽¹⁾
Subscriber relationships	57,022
Merchant relationships	32,176
Developed technology	571
Trade name	19,325
Other non-current assets	3,033
Total assets acquired	$	381,356
Accounts payable	$	5,951
Accrued merchant and supplier payables	82,934
Accrued expenses	22,700
Other current liabilities	3,482
Deferred income taxes, non-current	1,264
Other non-current liabilities	5,667
Total liabilities assumed	$	121,998
Total acquisition price	$	259,358


(1)	The estimated useful lives of the acquired intangible assets are 5 years for subscriber relationships, 3 years for merchant relationships, 2 years for developed technology and 5 years for trade name.

Ideeli, Inc.

On January 13, 2014, the Company acquired all of the outstanding equity interests of Ideeli, Inc. (d/b/a "Ideel"), a fashion flash site based in the United States. The primary purpose of this acquisition was to expand and advance the Company's product offerings. The aggregate acquisition-date fair value of the consideration transferred for the Ideel acquisition totaled $42.7 million in cash.

The following table summarizes the allocation of the aggregate acquisition price of the Ideel acquisition (in thousands):



Cash and cash equivalents	$	79
Accounts receivable	988
Deferred income taxes	640
Prepaid expenses and other current assets	22,081
Property, equipment and software	8,173
Goodwill	4,203
Intangible assets:⁽¹⁾
Subscriber relationships	5,490
Brand relationships	7,100
Trade name	4,500
Deferred income taxes, non-current	8,877
Total assets acquired	$	62,131
Accounts payable	$	1,640
Accrued supplier payables	4,092
Accrued expenses	9,118
Other current liabilities	482
Deferred income taxes, non-current	348
Other non-current liabilities	3,753
Total liabilities assumed	$	19,433
Total acquisition price	$	42,698


(1)	The estimated useful lives of the acquired intangible assets are 3 years for subscriber relationships, 5 years for brand relationships and 5 years for trade name.

Other Acquisitions

The Company acquired four other businesses during the year ended December 31, 2014. The primary purpose of these acquisitions was to acquire an experienced workforce, expand and advance product offerings and enhance technology capabilities. The aggregate acquisition-date fair value of the consideration transferred for these acquisitions totaled $32.9 million, which consisted of the following (in thousands):



Cash	$	17,364
Issuance of 1,429,897 shares of Class A common stock	11,110
Contingent consideration	4,388
Total	$	32,862

The fair value of the Class A Common Stock issued as consideration for one of the acquisitions was measured based on the stock price upon closing of the related transaction on November 13, 2014.

The following table summarizes the allocation of the aggregate purchase price of these other acquisitions (in thousands):



Net working capital (including acquired cash of $0.2 million)	$	(396	)
Goodwill	27,150
Intangible assets: ⁽¹⁾
Subscriber relationships	2,555
Developed technology	3,372
Brand relationships	579
Deferred income taxes, non-current	(398		)
Total purchase price	$	32,862


(1)	Acquired intangible assets have estimated useful lives of between 1 and 5 years.

Pro forma results of operations presented below do not include the results of these other acquisitions because the effects of these acquisitions, individually and in the aggregate, were not material to the Company's consolidated results of operations.

Pro Forma Financial Information

The following unaudited pro forma information presents the combined operating results of the Company for the year ended December 31, 2013, as if the Company had acquired Ticket Monster and Ideel as of January 1, 2013 (in thousands). Pro forma results of operations have not been presented for the year ended December 31, 2014, because the operating results of Ticket Monster and Ideel from January 1, 2014 through their respective acquisition dates were not material to the Company's consolidated results of operations for the year ended December 31, 2014. The underlying pro forma results include the historical financial results of the Company and these two acquired businesses adjusted for depreciation and amortization expense associated with the assets acquired. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of the Company and the acquired entities. Accordingly, these unaudited pro forma results are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisitions had occurred as of January 1, 2013, nor are they indicative of future results of operations.



	Year Ended December 31, 2013
Revenue	$	2,763,639
Net loss	(217,613		)

The revenue and net loss of Ticket Monster included in our consolidated statements of operations were $149.6 million and $45.4 million, respectively, for the year ended December 31, 2014. The revenue and net loss of Ideel included in our consolidated statements of operations were $82.4 million and $12.3 million, respectively, for the year ended December 31, 2014.

2013 Acquisition Activity

The primary purpose of the Company's seven acquisitions during the year ended December 31, 2013 was to enhance the Company's technology capabilities, acquire experienced workforces and expand and advance product offerings. The aggregate acquisition-date fair value of the consideration transferred for these acquisitions totaled $16.1 million, which consisted of the following (in thousands):



Cash	$	9,459
Issuance of Class A common stock	3,051
Contingent consideration	3,567
Total	$	16,077

The following table summarizes the allocation of the aggregate acquisition price of acquisitions for the year ended December 31, 2013 (in thousands):



Net working capital (including acquired cash of $2.1 million)	$	1,728
Property and equipment	99
Goodwill	9,504
Intangible assets: ⁽¹⁾
Subscriber relationships	1,928
Merchant relationships	757
Developed technology	2,742
Other intangible assets	50
Net deferred tax liabilities	(731		)
Total acquisition price	$	16,077


(1)	Acquired intangible assets have estimated useful lives of between 1 and 5 years.

Pro forma results of operations have not been presented because the effects of these business combinations, individually and in the aggregate, were not material to the Company's consolidated results of operations.

2012 Acquisition Activity

The primary purpose of the Company's ten acquisitions during the year ended December 31, 2012 was to enhance the Company's technology and marketing capabilities and to expand and advance product offerings. The aggregate acquisition-date fair value of the consideration transferred for these acquisitions totaled $54.9 million, which consisted of the following (in thousands):



Cash	$	49,013
Purchase price obligations	2,485
Contingent consideration	3,400
Total	$	54,898

The following table summarizes the allocation of the aggregate acquisition price of acquisitions for the year ended December 31, 2012 (in thousands):



Net working capital (including acquired cash of $2.1 million)	$	1,750
Property and equipment	165
Goodwill	39,170
Intangible assets:⁽¹⁾
Subscriber relationships	170
Merchant relationships	1,500
Developed technology	14,350
Net deferred tax liabilities	(2,207		)
Total acquisition price	$	54,898


(1)	Acquired intangible assets have estimated useful lives of between 1 and 5 years.

Purchases of Additional Interests in Consolidated Subsidiaries

During the year ended December 31, 2014, the Company acquired additional interests in majority-owned subsidiaries for an aggregate acquisition price of $3.9 million. Cash consideration of $2.3 million was paid in 2014 and the remaining amounts of $1.0 million and $0.6 million are included within other current liabilities and other non-current liabilities, respectively, on the consolidated balance sheet as of December 31, 2014.

During the year ended December 31, 2012, the Company acquired additional interests in majority-owned subsidiaries for an aggregate acquisition price of $16.7 million, including $16.1 million of cash consideration and $0.6 million of Class A common stock. Cash consideration of $14.1 million was paid in 2012 and the remaining $2.0 million was paid in 2013. Additionally, in connection with these transactions, certain liability-classified subsidiary stock-based compensation awards were settled in exchange for $15.2 million of cash, $2.3 million of Class A common stock and $10.5 million of deferred compensation that was subsequently recognized as compensation expense over service periods of between one and two years. Cash settlements of $14.0 million were paid in 2012, and the remaining $1.2 million was paid in 2013.