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Business Combinations | 3 Months Ended
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Mar. 31, 2024
Business Combinations [Abstract] |
Business Combinations | NOTE 3. Business Combinations D2C Acquisition. On November 1, 2023, the Company acquired all of the outstanding stock of D2C Media Inc. and EZResults Inc. (collectively, the "D2C Acquisition"), a leading provider of website and digital advertising solutions in Canada for $79.8 million total purchase consideration. The Company expensed as incurred total acquisition costs of $0.1 million during the quarter ended March 31, 2024. These costs were recorded in General and administrative expenses in the Consolidated Statements of Income. As part of the D2C Acquisition, the Company may be required to pay a cash earnout of up to an additional CAD$35.0 million (approximately USD$25.9 million as of March 31, 2024). The payment is not included in the total purchase consideration and is deemed compensation expense, as the potential cash compensation is to former equity holders who became employees and will be forfeited if employment is terminated prior to the end of the earnout period. The amount to be paid will be determined by the acquired business’ future achievement of certain revenue-related financial targets through December 31, 2025 and expensed over each performance period. The Company may expense up to CAD$15.0 million (approximately USD$11.1 million as of March 31, 2024) associated with the remaining portion of the earnout for each of the years ending December 31, 2024 and 2025. Preliminary Purchase Price Allocation. The preliminary 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 multi-period excess earnings and the relief of royalty methods. The preliminary fair values of all assets acquired and liabilities assumed are subject to change within the one-year measurement period. The preliminary D2C Acquisition purchase price allocation is as follows (in thousands):
|  | Preliminary Acquisition-date Fair Value |
Cash consideration |  | $ | 79,841 |
Cash and cash equivalents |  | $ | 3,673 |
Accounts receivable |  |  | 4,640 |
Other assets acquired (1) |  |  | 1,378 |
Identified intangible assets (2) |  |  | 38,967 |
Total assets acquired |  |  | 48,658 |
Accounts payable and accrued liabilities |  |  | (1,698 | )
Other liabilities assumed (3) |  |  | (815 | )
Deferred tax liabilities, net |  |  | (8,558 | )
Total liabilities assumed |  |  | (11,071 | )
Net identifiable assets |  |  | 37,587 |
Goodwill |  |  | 42,254 |
Total purchase consideration |  | $ | 79,841 |
(1) Other assets acquired primarily consists of property and equipment, operating lease right of use assets and other prepaid expenses. (2) Preliminary information regarding the identifiable intangible assets acquired is as follows:
|  | Preliminary Acquisition-Date Fair Value (in thousands) |  |  | Amortization Period (in years)
Customer relationships |  | $ | 29,153 |  |  | 14
Acquired software |  |  | 9,092 |  |  | 5
Trade name |  |  | 722 |  |  | 5
Total |  | $ | 38,967 |  |  |
(3) Other liabilities assumed primarily consists of operating lease right of use liabilities and income taxes payable. A reconciliation of cash consideration to Payment for acquisitions, net of cash acquired related to the D2C Acquisition in the Consolidated Statements of Cash Flows as of December 31, 2023 is as follows (in thousands):
Cash consideration |  | $ | 79,841 |
Less: Cash acquired |  |  | (3,673 | )
Total payment for D2C Media, net |  | $ | 76,168 |
Goodwill. In connection with the D2C Acquisition, the Company recorded goodwill in the amount of $42.3 million, which is primarily attributable to expected sales growth from existing and future customers, product offerings, technology and the value of the acquired assembled workforce. All of the goodwill is considered non-deductible for income tax purposes. The D2C Acquisition would have had an immaterial impact on the Company’s Consolidated Financial Statements for the three months ended March 31, 2023.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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