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Business Combination | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
Business Combination | Note 4. Business Combination On February 21, 2018, the Company acquired all of the outstanding stock of Dealer Inspire Inc., an innovative technology leader providing progressive dealer websites, digital retailing and messaging platform products, and substantially all of the net assets of Launch Digital Marketing LLC, a provider of digital marketing services, including paid, organic, social and creative services. Dealer Inspire consists of proprietary solutions that are complementary extensions of the Company’s online marketplace platform and current suite of dealer solutions. The Company expensed as incurred total acquisition costs of $4.9 million, of which $4.3 million was recorded during the twelve months ended December 31, 2018. These costs were recorded in General and administrative in the Consolidated and Combined Statements of (Loss) Income. In connection with the DI Acquisition, Dealer Inspire’s unvested equity awards were cash settled for a total of $5.7 million. The fair value of these awards was based on the price paid per common share to the owners of the acquired businesses and recognized immediately after the DI Acquisition as compensation expense in the Company’s Consolidated and Combined Statements of (Loss) Income. Purchase Price Allocation. The fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management’s estimates and assumptions, as well as other information compiled by management, including third-party valuations that utilize customary valuation procedures and techniques, such as the income approach. The DI Acquisition purchase price allocation is as follows (in thousands):
|  | Acquisition-date Fair Value |
Cash consideration (1) |  | $ | 164,333 |
Contingent consideration (2) |  |  | 2,200 |
Cash settlement of DI Acquisition's unvested equity awards (3) |  |  | (5,700 | )
Total consideration |  | $ | 160,833 |
Cash |  | $ | 1,480 |
Accounts receivable |  |  | 11,291 |
Property and equipment |  |  | 1,215 |
Other assets |  |  | 320 |
Identified intangible assets (4) |  |  | 71,900 |
Total assets acquired |  |  | 86,206 |
Accounts payable |  |  | (2,514 | )
Deferred tax liability |  |  | (14,741 | )
Other liabilities |  |  | (4,460 | )
Total liabilities assumed |  |  | (21,715 | )
Net identifiable assets |  |  | 64,491 |
Goodwill |  |  | 96,342 |
Total consideration |  | $ | 160,833 |
(1) | A reconciliation of cash consideration to Payment for DI Acquisition, net in the Consolidated and Combined Statements of Cash Flows is as follows (in thousands):
Cash consideration |  | $ | 164,333 |
Less: Cash settlement of DI Acquisition's unvested equity awards (3) |  |  | (5,700 | )
Less: Cash acquired |  |  | (1,480 | )
Payment for DI Acquisition, net |  | $ | 157,153 |
(2) | As part of the DI Acquisition, the Company may be required to pay up to an additional $15 million in cash consideration to the former owners. The actual amount to be paid will be based on Dealer Inspire’s future performance related to certain revenue targets to be attained over a three-year performance period. The fair value was estimated utilizing the income approach valuation technique. The contingent consideration liability is recorded in Other noncurrent liabilities in the Consolidated Balance Sheets.
(3) | In connection with the DI Acquisition, Dealer Inspire’s unvested equity awards were cash settled. The fair value of these awards was based on the price paid per common share to the owners of the acquired businesses and recognized immediately after the DI Acquisition as compensation expense in the Company’s Consolidated and Combined Statements of (Loss) Income, as follows: $3.9 million in Product and technology, $1.0 million in Cost of revenue and operations, $0.5 million in Marketing and sales and $0.3 million in General and administrative.
(4) | Information regarding the identifiable intangible assets acquired is as follows:
|  | DI Acquisition-Date Fair Value (in thousands) |  |  | Weighted-Average Amortization Period (in years)
Acquired software |  | $ | 39,500 |  |  | 4
Customer relationships |  |  | 18,300 |  |  | 4
Trade names |  |  | 14,100 |  |  | 10
Total |  | $ | 71,900 |  |  |
In addition to the total consideration of $160.8 million, the Company granted stock-based compensation awards, worth up to $25.5 million, to certain employees. These awards require continued employee service and are based on Dealer Inspire’s future performance related to certain revenue targets to be attained over a three-year performance period. For further information, see Note 12 (Stock-Based Compensation). Goodwill. In connection with the DI Acquisition, the Company recorded goodwill in the amount of $96.3 million, which is primarily attributable to sales growth from existing and future technology, product offerings and customers and the value of the acquired assembled workforce. Of the total goodwill recorded in connection with the DI Acquisition, approximately $15.0 million was deductible for income tax purposes. Pro forma Financial Information (unaudited). The unaudited pro forma revenue and net income of the Company and Dealer Inspire are $669.8 million and $46.1 million as of December 31, 2018, respectively. This information gives effect to pro forma events that are factually supportable and directly attributable to the transaction. The unaudited pro forma results reflect adjustments for compensation expense related to the cash settlement of Dealer Inspire’s unvested equity awards; acquisition and integration costs; incremental intangible assets amortization based on the fair values of each identifiable intangible asset; certain other compensation related costs, including retention bonuses and stock-based compensation; and interest expense on the borrowings under the revolving loan to fund the DI Acquisition. Pro forma adjustments were tax-affected at the Company’s corporate blended statutory tax rate applicable during the respective periods presented. This unaudited pro forma information is presented for informational purposes only and may not be indicative of the historical results of operations that would have been obtained if the DI Acquisition had taken place on January 1, 2018, nor the results that may be obtained in the future. The unaudited pro forma information does not reflect future synergies or other such costs or savings. From the date of the DI Acquisition, the Company included Dealer Inspire’s financial results in its Consolidated and Combined Statements of (Loss) Income for the year ended December 31, 2018. Dealer Inspire contributed revenue of $53.1 million and a net loss of $11.3 million. The net loss includes $14.0 million of incremental intangible asset amortization and $8.2 million of costs related to the DI Acquisition, primarily related to the cash settlement of Dealer Inspire’s unvested equity awards and acquisition-related costs, both of which are on a pre-tax basis.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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