ACQUISITIONS

12 Months Ended

Dec. 31, 2021

We periodically complete business combinations that align with our business strategy. Our acquisitions during 2021 and 2019 were cash transactions, funded by use of our revolving credit facility and additional debt issued in June 2021 (Note 14). We completed these acquisitions to add merchant services and financial technology capabilities and to reach new customers. Transaction costs related to these acquisitions totaled $18,913 in 2021 and $215 in 2019. We did not complete any acquisitions during 2020. Information regarding goodwill by reportable business segment and the useful lives of acquired intangibles can be found in Note 3. Information regarding the calculation of the estimated fair values of the acquired intangibles can be found in Note 8.

2021 acquisition – On June 1, 2021, we acquired all of the equity of First American in a cash transaction for $958,514, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired, subject to customary adjustments under the terms of the acquisition agreement. First American is a large-scale payments technology company that provides partners and merchants with comprehensive in-store, online and mobile payment solutions. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed resulted in non-deductible goodwill of $727,173. The transaction resulted in goodwill as First American provides an end-to-end payments technology platform, which we believe will provide significant leverage to accelerate organic growth. The goodwill and results of operations of First American from the date of acquisition are included in the Payments segment.

The acquisition was accounted for as a business combination and the allocation of the purchase price to the assets acquired and liabilities assumed is preliminary, pending finalization of tax returns for the pre-acquisition period, which we expect to complete prior to June 2022. Subsequent to the initial purchase price allocation completed during the second quarter of 2021, we recorded measurement period adjustments that increased intangible assets $15,694, decreased goodwill $9,135 and increased deferred revenue $3,027, as discussed in Note 2, with the offset to various liabilities, primarily deferred income taxes. These measurement period adjustments did not have a significant impact on the 2021 consolidated statement of income.

The following illustrates the preliminary allocation of the purchase price, as of December 31, 2021, to the assets acquired and liabilities assumed:


(in thousands)	Purchase price allocation
Trade accounts receivable	$	27,296
Other current assets	8,533
Property, plant and equipment	9,873
Operating lease assets	24,396
Intangible assets:
Customer relationships	127,000
Partner relationships	72,000
Technology-based intangibles	65,000
Trade names	21,000
Internal-use software	6,111
Total intangible assets	291,111
Goodwill	727,173
Other non-current assets	350
Accounts payable	(18,475)
Funds held for customers	(9,428)
Accrued liabilities	(23,460)
Operating lease liabilities, non-current	(21,316)
Deferred income taxes	(53,163)
Other non-current liabilities	(4,376)
Payment for acquisition, net of cash, cash equivalents, restricted cash and restricted cash equivalents acquired of $15,841	$	958,514

Our results of operations for 2021 included revenue of $194,976 and net income of $1,806 from the operations of First American. The following unaudited pro forma financial information summarizes our consolidated results of operations for the years ended December 31 as though the acquisition occurred on January 1, 2020:


(in thousands)	2021		2020
Revenue	$	2,182,648	$	2,082,130
Net income (loss) attributable to Deluxe	64,705		(45,407)

The unaudited pro forma financial information was prepared in accordance with the accounting policies described in Note 1. The pro forma information includes adjustments to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2020, with the consequential tax effects. The pro forma information also includes adjustments to reflect the additional interest expense on the debt we issued to fund the acquisition (Note 14). The acquisition transaction costs we incurred are reflected in the 2020 pro forma results.

This pro forma financial information is for informational purposes only. It does not reflect the integration of the businesses or any synergies that may result from the acquisition. As such, it is not indicative of the results of operations that would have been achieved had the acquisition been consummated on January 1, 2020. In addition, the pro forma amounts are not indicative of future operating results.

2019 acquisitions – In December 2019, we completed 2 acquisitions in our Payments segment totaling $10,000. We acquired selected assets comprising the remittance processing business of Fiserv, Inc., including its lockbox processing services, and selected assets comprising the remittance processing business of Synchrony Financial. The allocation of the purchase prices based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $4,174 related to the Fiserv business. This acquisition resulted in goodwill as it allowed us to extend our expertise and reach with the addition of a reseller arrangement through the banking sales channel of Fiserv. The other assets acquired and liabilities assumed consisted primarily of customer list intangible assets of $5,815. As our 2019 acquisitions were not significant to our reported operating results both individually and in the aggregate, pro forma results of operations are not provided. During 2019, we also recorded a measurement period adjustment related to a 2018 acquisition, reducing the purchase price and related goodwill by $1,749.