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BUSINESS ACQUISITIONS | 12 Months Ended
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Dec. 31, 2020
Business Combinations [Abstract] |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS Changes in Contingent Consideration In 2018, the Company acquired all of the outstanding equity interests of QuoteWizard.com, LLC (“QuoteWizard”) and Ovation Credit Services, Inc. (“Ovation”). See 2018 Acquisitions—QuoteWizard and 2018 Acquisitions—Ovation below. In 2017, the Company acquired certain assets of Snap Capital LLC, which does business under the name SnapCap (“SnapCap”). During 2020, the Company made the final earnout payments related to the achievement of certain defined earnings targets for SnapCap. The earnout payment of $3.0 million in 2019 is included within cash flows from financing activities on the consolidated statement of cash flows. Of the total earnout payments of $6.0 million in 2020, $3.3 million is included within cash flows from financing activities and $2.7 million is included within cash flows from operating activities on the consolidated statement of cash flows. In 2017, the Company acquired all of the assets of Deposits Online, LLC, which does business under the name DepositAccounts.com (“DepositAccounts”). The Company made no earnout payments related to the DepositAccounts acquisition during 2020, and this earnout is complete. Total earnout payments of $4.0 million in 2018 are included within cash flows from financing activities on the consolidated statement of cash flows, except for an immaterial portion included within cash flows from operating activities. Total earnout payments of $3.0 million in 2019 are included within cash flows from operating activities on the consolidated statement of cash flows. Changes in the fair value of contingent consideration is summarized as follows (in thousands):
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
QuoteWizard | $ | 3,980 |  |  | $ | 27,103 |  |  | $ | 6,833 |
Ovation | 1,270 |  |  | 26 |  |  | 1,654 |
SnapCap | 77 |  |  | 2,220 |  |  | (330) |
DepositAccounts | — |  |  | (947) |  |  | 1,979 |
CompareCards | — |  |  | — |  |  | 652 |
Total changes in fair value of contingent consideration | $ | 5,327 |  |  | $ | 28,402 |  |  | $ | 10,788 |
2019 Acquisition ValuePenguin On January 10, 2019, the Company acquired Value Holding, Inc., the parent company of ValuePenguin Inc. ("ValuePenguin"), a personal finance website that offers consumers objective analysis on a variety of financial topics from insurance to credit cards. The Company made an upfront cash payment of $106.1 million at the closing of the transaction, funded through $90.0 million drawn on the Company's revolving credit facility and the balance using cash on hand. The purchase price of $106.2 million is comprised of the upfront cash payment of $106.1 million and a $0.1 million post-closing payment for working capital settlement. The acquisition has been accounted for as a business combination. In 2019, the Company completed the determination of the final allocation of purchase price to the assets acquired and liabilities assumed as follows (in thousands):
| Fair Value
Net working capital | $ | 2,502 |
Fixed assets | 68 |
Intangible assets | 31,600 |
Goodwill | 71,739 |
Net noncurrent assets | 323 |
Total purchase price | $ | 106,232 |
The Company primarily used the income approach for the valuation as appropriate and used valuation inputs in these models and analyses that were based on market participant assumptions. Market participants are buyers and sellers unrelated to the Company, and fair value is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date. The acquired intangible assets are definite-lived assets consisting of developed technology, content and trademarks and tradenames. The estimated fair values of the developed technology were determined using the cost replacement method, the content was determined using the excess earnings method, and the trademarks and tradenames were determined using the relief from royalty method. The estimated fair value of the intangible assets are based on estimates for content lifecycles, estimates for revenue growth rates, estimates for future cash flows, the probability weighting of scenarios and discount rates, known at the acquisition date, which management believes are reasonable. The fair value of the intangible assets with definite lives is as follows (dollars in thousands):
| Fair Value | Weighted Average Amortization Life
Technology | $ | 4,200 |  | 3 years
Content | 26,100 |  | 3 years
Trademarks and tradenames | 1,300 |  | 5 years
Total intangible assets | $ | 31,600 |  | 3.1 years
The Company recorded goodwill of $71.7 million, which represents the excess of the purchase price over the estimated fair value of tangible and intangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to ValuePenguin as a going concern, which represents the ability of the Company to earn a higher return on the collection of assets and business of ValuePenguin than if those assets and business were to be acquired and managed separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill was recorded in the Company’s then one reportable segment. For income tax purposes, the Company accounted for the acquisition as an asset purchase which would indicate the goodwill will be tax deductible. Subsequent to the acquisition date, the Company’s consolidated results of operations include the results of the acquired ValuePenguin business. In 2019, the Company’s consolidated results of operations include revenue of $19.8 million attributable to the ValuePenguin business. In the first six months of 2019, net income from continuing operations attributable to the ValuePenguin business was $3.1 million. Due to the integration of the ValuePenguin business subsequent to the acquisition, earnings of the acquired ValuePenguin business beginning in the third quarter of 2019 is impracticable to determine with sufficient accuracy. Acquisition-related costs were $0.1 million in 2019 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income (loss). 2018 Acquisitions QuoteWizard On October 31, 2018, the Company acquired QuoteWizard.com, LLC, one of the largest insurance comparison marketplaces in the growing online insurance advertising market. QuoteWizard services clients by driving consumers to insurance companies’ websites, providing leads to agents and carriers, as well as phone transfers of consumers into carrier call centers. The Company paid $299.9 million in initial cash consideration, funded through $174.9 million of cash on hand and $125.0 million drawn on the Company's revolving credit facility, and could make up to three additional earnout payments, each ranging from zero to $23.4 million, based on certain defined operating results during the earnout periods November 1, 2018 through October 31, 2019, November 1, 2019 through October 31, 2020, and November 1, 2020 through October 31, 2021. These additional payments, to the extent earned, will be payable in cash. The purchase price of $313.4 million is comprised of the upfront cash payment of $299.9 million, $13.9 million for the estimated fair value of the earnout payments, and a $0.4 million post-closing receipt for working capital settlement. In the fourth quarter of 2019, the Company paid $23.4 million related to the earnout payment for the period of November 1, 2018 through October 31, 2019, of which $13.9 million is included within cash flows from financing activities and $9.5 million is included within cash flows from operating activities on the consolidated statement of cash flows. In the fourth quarter of 2020, the Company paid $20.2 million related to the earnout payment for the period of November 1, 2019 through October 31, 2020, which is included within cash flows from operating activities on the consolidated statement of cash flows. As of December 31, 2020, the estimated fair value of the contingent consideration totaled $8.2 million, which is included in non-current contingent consideration in the accompanying consolidated balance sheet. The estimated fair value of the contingent consideration payments is determined using an option pricing model. The estimated value of the contingent consideration is based upon available information and certain assumptions, known at the time of this report, which management believes are reasonable. Any differences in the actual contingent consideration payments will be recorded in operating income in the consolidated statements of operations and comprehensive income (loss). During 2020, 2019 and 2018, the Company recorded $4.0 million, $27.1 million and $6.8 million, respectively, of contingent consideration expense in the consolidated statements of operations and comprehensive income (loss) due to the change in estimated fair value of the contingent consideration. The acquisition has been accounted for as a business combination. In 2019, the Company completed the determination of the final allocation of purchase price to the assets acquired and liabilities assumed as follows (in thousands):
| Fair Value
Net working capital | $ | 8,521 |
Fixed assets | 1,509 |
Intangible assets | 120,400 |
Goodwill | 182,896 |
Other noncurrent assets | 29 |
Total purchase price | $ | 313,355 |
The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that were based on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date. The acquired intangible assets are definite-lived assets consisting of developed technology, customer relationships, content and trademarks and tradenames. The estimated fair values of the developed technology were determined using the excess earnings method, the customer relationships were determined using the distributor method, the content was determined using the cost replacement method, and the trademarks and tradenames were determined using the relief from royalty method. The fair value of the intangible assets with definite lives is as follows (dollars in thousands):
| Fair Value | Weighted Average Amortization Life
Technology | $ | 68,900 |  | 4 years
Customer lists | 42,700 |  | 14.7 years
Content | 1,000 |  | 3 years
Trademarks and tradenames | 7,800 |  | 5 years
Total intangible assets | $ | 120,400 |  | 7.9 years
The Company recorded goodwill of $182.9 million, which represents the excess of the purchase price over the estimated fair value of tangible and intangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to QuoteWizard as a going concern, which represents the ability of the Company to earn a higher return on the collection of assets and business of QuoteWizard than if those assets and business were to be acquired and managed separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill was recorded in the Company’s then one reportable segment. For income tax purposes, the acquisition was an asset purchase and the goodwill will be tax deductible. Acquisition-related costs were $4.8 million in 2018 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income (loss). The unaudited pro forma financial results for the year ended December 31, 2018 below combine the consolidated results of the Company and QuoteWizard, giving effect to the acquisition as if it had been completed on January 1, 2017. This unaudited pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had the acquisition been completed as of January 1, 2017, or any other date. The unaudited pro forma financial results include adjustments for additional amortization expense based on the fair value of the intangible assets with definite lives and their estimated useful lives, as well as changes in depreciation expense associated with the change in fair value of the property and equipment recorded in relation to the acquisition. Interest expense was adjusted to eliminate historical interest associated with QuoteWizard's revolving credit facility and notes payable that were not assumed with the acquisition, as well as reflect incremental interest expense associated with debt issued to finance the acquisition. The provision for income taxes from continuing operations has also been adjusted to reflect taxes on the historical results of operations of QuoteWizard. QuoteWizard did not pay taxes at the entity level as it was a limited liability company whose members elected for it to be taxed as a partnership.
| 2018 |
| (in thousands)
Pro forma revenue | $ | 900,978 |  |
Pro forma net income from continuing operations | $ | 110,015 |  |
The unaudited pro forma net income from continuing operations in 2018 includes the aggregate after-tax contingent consideration expense associated with the QuoteWizard earnout of $4.9 million. Acquisition-related costs of $5.9 million incurred by the Company and QuoteWizard that are directly attributable to the acquisition, which will not have an ongoing impact, have been eliminated from the unaudited pro forma net income from continuing operations for 2018. Student Loan Hero On July 23, 2018, the Company acquired Student Loan Hero, Inc., a personal finance website dedicated to helping student loan borrowers manage their student debt. Student Loan Hero offers current and former students in-depth financial comparison tools, educational resources, and unbiased, personalized advice. The Company made an upfront cash payment of $60.7 million at the closing of the transaction, of which $2.3 million was recognized as severance expense in the Company's consolidated statements of operations and comprehensive income (loss). The purchase price of $60.4 million is comprised of the upfront cash payment of $60.7 million less the $2.3 million recognized as severance expense, and a $2.0 million post-closing payment for working capital settlement. The acquisition has been accounted for as a business combination. During 2018, the Company completed the determination of the final allocation of purchase price to the assets acquired and liabilities assumed as follows (in thousands):
| Fair Value
Net working capital | $ | 5,429 |
Intangible assets | 19,600 |
Goodwill | 40,856 |
Deferred tax liabilities | (5,467) |
Total purchase price | $ | 60,418 |
The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that were based on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date. The acquired intangible assets are definite-lived assets consisting of content, customer relationships and trademarks and tradenames. The estimated fair values of the content was determined using the excess earnings method, the customer relationships were determined using the distributor method and the trademarks and tradenames were determined using the relief from royalty method. The fair value of the intangible assets with definite lives is as follows (dollars in thousands):
| Fair Value | Weighted Average Amortization Life
Content | $ | 16,100 |  | 3 years
Customer lists | 2,500 |  | 10 years
Trademarks and tradenames | 1,000 |  | 5 years
Total intangible assets | $ | 19,600 |  | 4.0 years
The Company recorded goodwill of $40.9 million, which represents the excess of the purchase price over the estimated fair value of tangible and intangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to Student Loan Hero as a going concern, which represents the ability of the Company to earn a higher return on the collection of assets and business of Student Loan Hero than if those assets and business were to be acquired and managed separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill was recorded in the Company’s then one reportable segment. For income tax purposes, the acquisition was an equity purchase and the goodwill will not be tax deductible. Acquisition-related costs were $0.5 million in 2018 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income (loss). Ovation On June 11, 2018, the Company acquired Ovation Credit Services, Inc., a leading provider of credit services with a strong customer service reputation. Ovation utilizes a proprietary software application that facilitates the credit repair process and is integrated directly with certain credit reporting agencies while educating consumers on credit improvement via ongoing outreach with Ovation case advisors. The proprietary software application offers consumers a simple, streamlined process to identify, dispute, and correct inaccuracies within their credit reports. The Company paid $12.2 million in initial cash consideration and had the potential to make up to two additional earnout payments, each ranging from zero to $4.4 million, based on certain defined operating metrics during the earnout periods July 1, 2018 through June 30, 2019 and July 1, 2019 through June 30, 2020. The purchase price of $17.9 million is comprised of the upfront cash payment of $12.2 million, $5.8 million for the estimated fair value of the earnout payments, and a $0.1 million post-closing receipt for working capital settlement. In the fourth quarter of 2019, the Company paid $4.4 million related to the earnout payment for the period of July 1, 2018 through June 30, 2019, which is included within cash flows from financing activities on the consolidated statement of cash flows. In the fourth quarter of 2020, the Company paid $4.4 million related to the earnout payment for the period of July 1, 2019 through June 30, 2020, of which $1.4 million is included within cash flows from financing activities and $3.0 million is included within cash flows from operating activities on the consolidated statement of cash flows. The acquisition has been accounted for as a business combination. In 2019, the Company completed the determination of the final allocation of purchase price to the assets acquired and liabilities assumed as follows (in thousands):
| Fair Value
Net working capital | $ | 303 |
Fixed assets | 76 |
Intangible assets | 8,900 |
Goodwill | 11,280 |
Net deferred tax liabilities | (2,688) |
Total purchase price | $ | 17,871 |
The Company primarily used the income approach for the valuation as appropriate, and used valuation inputs in these models and analyses that were based on market participant assumptions. Market participants are buyers and sellers unrelated to the Company and fair value is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction at the measurement date. The acquired intangible assets are definite-lived assets consisting of developed technology, customer relationships and trademarks and tradenames. The estimated fair values of the developed technology were determined using the excess earnings method, the customer relationships were determined using the cost savings method and the trademarks and tradenames were determined using the relief from royalty method. The fair value of the intangible assets with definite lives is as follows (dollars in thousands):
| Fair Value | Weighted Average Amortization Life
Technology | $ | 6,000 |  | 7 years
Customer lists | 1,900 |  | 1 year
Trademarks and tradenames | 1,000 |  | 4 years
Total intangible assets | $ | 8,900 |  | 5.4 years
The Company recorded goodwill of $11.3 million, which represents the excess of the purchase price over the estimated fair value of tangible and intangible assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to Ovation as a going concern, which represents the ability of the Company to earn a higher return on the collection of assets and business of Ovation than if those assets and business were to be acquired and managed separately. The benefit of access to the workforce is an additional element of goodwill. The goodwill was recorded in the Company’s then one reportable segment. For income tax purposes, the acquisition was an equity purchase and the goodwill will not be tax deductible. Acquisition-related costs were $0.4 million in 2018 and are included in general and administrative expense on the consolidated statement of operations and comprehensive income (loss). Pro forma Financial Results The unaudited pro forma financial results for the years ended December 31, 2019 and 2018 combine the consolidated results of the Company and Ovation, Student Loan Hero, QuoteWizard and ValuePenguin, giving effect to the acquisitions as if the Ovation, Student Loan Hero and QuoteWizard acquisitions had been completed on January 1, 2017, and as if the ValuePenguin acquisition had been completed on January 1, 2018. This unaudited pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had the acquisitions been completed as of January 1, 2017 or 2018, or any other date. The unaudited pro forma financial results include adjustments for additional amortization expense based on the fair value of the intangible assets with definite lives and their estimated useful lives. Depreciation expense and interest expense were adjusted for the impact of the QuoteWizard acquisition, as described above, including incremental interest associated with debt issued to finance the acquisition. Interest expense was also adjusted to reflect incremental interest associated with debt issued to finance the ValuePenguin acquisition. The provision for income taxes from continuing operations has been adjusted to reflect taxes on the historical results of operations of QuoteWizard, as described above.
| 2019 | 2018 |
| (in thousands)
Pro forma revenue | $ | 1,107,118 |  | $ | 934,209 |  |
Pro forma net income from continuing operations | $ | 39,173 |  | $ | 104,153 |  |
The unaudited pro forma net income from continuing operations in 2019 includes the aggregate after-tax contingent consideration expense associated with the DepositAccounts, SnapCap, Ovation and QuoteWizard earnouts of $21.5 million. The unaudited pro forma net income from continuing operations for 2018 has been adjusted to include acquisition-related costs of $0.6 million incurred by the Company that are directly attributable to the ValuePenguin acquisition, and which will not have an ongoing impact. Accordingly, these acquisition-related costs have been eliminated from the unaudited pro forma net income from continuing operations for 2019. The unaudited pro forma net income from continuing operations in 2018 includes the aggregate after-tax contingent consideration expense associated with the DepositAccounts, SnapCap, Ovation and QuoteWizard earnouts of $7.2 million. Acquisition-related costs of $6.9 million incurred by the Company, Student Loan Hero and QuoteWizard that are directly attributable to the Ovation, Student Loan Hero and QuoteWizard acquisitions, and which will not have an ongoing impact, have been eliminated from the unaudited pro forma net income from continuing operations for 2018.

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