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Business Combinations | 12 Months Ended
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Dec. 31, 2024
Business Combinations [Abstract] |
Business Combinations | Note 3. Business Combinations D2C Media Acquisition. On November 1, 2023, the Company acquired all of the outstanding stock of D2C Media Inc. and EZResults Inc. (collectively, the "D2C Media Acquisition"), a leading provider of website and digital advertising solutions in Canada for $80.1 million total purchase considera tion. The Company expensed as incurred total acquisition costs of $1.4 million during the year ended December 31, 2023. These costs were recorded in General and administrative expenses in the Consolidated Statements of Income. As part of the D2C Media Acquisition, the Company may be required to pay a cumulative cash earnout of up to an additional CAD$34.1 million (approximately US$23.8 million as of December 31, 2024), of which CAD $15.0 million (approximately US$10.8 million) and CAD$4.1 million (approximately US$3.0 million) was expensed during the years ending December 31, 2024 and 2023, respectively. 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 US$10.4 million as of December 31, 2024) associated with the remaining portion of the earnout for the year ending December 31, 2025. Purchase Price Allocation. The fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management’s final 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 D2C Media Acquisition purchase price allocation is as follows (in thousands):
|  | Acquisition-date Fair Value |
Total purchase consideration (1) |  | $ | 80,056 |
Cash and cash equivalents |  | $ | 3,673 |
Accounts receivable |  |  | 4,640 |
Other assets acquired (2) |  |  | 1,378 |
Identified intangible assets (3) |  |  | 38,967 |
Total assets acquired |  |  | 48,658 |
Accounts payable and accrued liabilities |  |  | (1,698 | )
Other liabilities assumed (1) (4) |  |  | (628 | )
Deferred tax liabilities, net (1) |  |  | (8,230 | )
Total liabilities assumed |  |  | (10,556 | )
Net identifiable assets |  |  | 38,102 |
Goodwill (1) |  |  | 41,954 |
Total purchase consideration |  | $ | 80,056 |
(1) During the year ended December 31, 2024, the Company recorded a $0.3 million purchase accounting adjustment, $0.2 million of which is reflected in Payments for acquisitions, net of cash acquired in the Consolidated Statements of Cash Flows. (2) Other assets acquired primarily consists of property and equipment, operating lease right of use assets and other prepaid expenses. (3) Information regarding the identifiable intangible assets acquired is as follows:
|  | 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 |  |  |
(4) Other liabilities assumed primarily consists of operating lease right of use liabilities and income taxes payable. A reconciliation of cash consideration to Payments for acquisitions, net of cash acquired related to the D2C Media 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 Media Acquisition, the Company recorded goodwill in the amount of $42.0 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 Media Acquisition would have had an immaterial impact on the Company’s Consolidated Financial Statements for the year ended December 31, 2022. AccuTrade Acquisition. On March 1, 2022, the Company acquired certain of the assets and assumed certain liabilities of Accu-Trade, LLC; Accu-Trade Canada, LLC; Galves Market Data; and Headstart Logistics, LLC d/b/a/ MADE Logistics (collectively, "AccuTrade"), which provides dealers with VIN-specific vehicle valuation and appraisal data, instant offer capabilities and logistics technology (the "AccuTrade Acquisition"). The Company expensed as incurred total acquisition costs of $2.0 million, of which $1.0 million were recorded during the year ended December 31, 2022. These costs were recorded in General and administrative expenses in the Consolidated Statements of Income. Purchase Price Allocation. The fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management’s final 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 AccuTrade Acquisition purchase price allocation is as follows (in thousands):
|  | Acquisition-date Fair Value |
Cash consideration |  | $ | 64,663 |
Other consideration (1) |  |  | 5,300 |
Contingent consideration (2) |  |  | 23,936 |
Total purchase consideration |  | $ | 93,899 |
Assets acquired (3) |  | $ | 1,595 |
Identified intangible assets (4) |  |  | 15,679 |
Total assets acquired |  |  | 17,274 |
Total liabilities assumed (5) |  |  | (235 | )
Net identifiable assets |  |  | 17,039 |
Goodwill |  |  | 76,860 |
Total purchase consideration |  | $ | 93,899 |
(1) In connection with the AccuTrade Acquisition, the Company entered into an agreement to provide one of the former owners with a one-year license to a certain product. The fair value of the license was determined to be $6.5 million, of which the Company received $1.2 million in cash upon the close of the AccuTrade Acquisition. The $5.3 million difference between the fair value of $6.5 million and the $1.2 million in cash was recorded as non-cash consideration and the $6.5 million license fee was recorded in Other accrued liabilities as a contract liability on the Consolidated Balance Sheets and was amortized into Other revenue on the Consolidated Statements of Income over the one-year contract term. The revenue related to the non-cash consideration of $0.9 million and $4.4 million for the years ended December 31, 2023 and 2022, respectively, is a non-cash reconciling item titled Amortization of deferred revenue related to AccuTrade Acquisition on the Consolidated Statements of Cash Flows. (2) As part of the AccuTrade Acquisition, the Company may be required to pay additional consideration to the former owners based on the achievement of certain financial targets. The Company has the option to pay consideration in cash or certain amounts in stock, which would result in a variable number of shares being issued in accordance with a calculation based on future share prices. The amount to be paid will be determined by the acquired business’ future performance to be attained over a three-year performance period; based on certain tiered performance metrics the maximum amount to be paid is $63.0 million, of which a maximum of $15.0 million could be in stock, with additional upside for performance that exceeds the tiered performance metrics. The contingent consideration is classified as Level 3 in the fair value hierarchy. The fair value is measured based on a Monte Carlo simulation. This amount represents the estimated fair value at the time of the acquisition. For more information on the fair value of the AccuTrade contingent consideration, see Note 4 (Fair Value Measurements). (3) Assets acquired primarily consist of accounts receivable. (4) Information regarding the identifiable intangible assets acquired is as follows:
|  | Acquisition-Date Fair Value (in thousands) |  |  | Amortization Period (in years)
Acquired software |  | $ | 12,926 |  |  | 5
Trade name |  |  | 1,446 |  |  | 10
Customer relationships |  |  | 1,307 |  |  | 7
Total |  | $ | 15,679 |  |  |
(5) Total liabilities assumed primarily consist of accounts payable. In connection with the AccuTrade Acquisition, the Company recorded goodwill in the amount of $76.9 million, which is primarily attributable to sales growth from existing and future technology, product offerings, customers and the value of the acquired assembled workforce. All of the goodwill is considered deductible for income tax purposes.

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