On November 1, 2020, the Company acquired 100% of HBA Group in Australia, including 100% of the equity interest in each of HBA Group’s entities HBA Legal, Pillion and Paratus. HBA Legal is a legal services provider that will complement the Company’s Crawford TPA Solutions segment in Australia. The purchase price included an initial cash payment of $4,026,000, net of working capital adjustment, and a maximum $3,200,000 payable in cash over the next four years based on achieving certain revenue and EBITDA performance goals as set forth in the purchase agreement. The acquisition was funded primarily through additional borrowings under the Company’s credit facility.

The financial results of certain of the Company’s international subsidiaries, including HBA Group, are included in the Company’s consolidated financial statements on a two-month delayed basis. Accordingly, the acquisition of HBA was reported as of January 1, 2021.

This acquisition was accounted for under the guidance of ASC 805-10, as a business combination under the acquisition method. As a result of the acquisition, the Company recognized net liabilities of ($880,000), definite-lived customer relationships of $1,574,000, and goodwill of $5,645,000. The customer relationships are amortized over an estimated life of 9 years. Goodwill is attributable to the assembled workforce acquired, and expected revenue and cost synergies as a result of the combination of the companies. The Company does not expect that goodwill attributable to the acquisition will be deductible for tax purposes.

The acquisition accounting is based on the fair value of the acquisition consideration transferred to the sellers, assets acquired and liabilities assumed as of the acquisition date. At the acquisition date, the fair value of the contingent consideration payable was estimated to be $2,400,000. At September 30, 2021, there were no material changes in the range of expected outcomes and the fair value of the contingent consideration from the acquisition date. Significant assumptions and estimates included, but were not limited to future expected cash flows, including projected revenues and expenses, estimated customer attrition rates, and the applicable discount rates. These assumptions and estimates were level 3 inputs and based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

There was no revision to the acquisition accounting during the three months ended September 30, 2021. The valuation of the assets acquired and liabilities assumed for HBA Group on the acquisition date as of September 30, 2021 is as follows:


(in thousands)	Opening Balance Sheet, Adjusted as of September 30, 2021

Assets
Cash and cash equivalents	$	240
Accounts receivable, net		1,081
Unbilled revenue, at estimated billable amounts		598
Other current assets		87
Operating lease right-of-use assets, net		1,502
Property and equipment, net		118
Customer relationships		1,574
Goodwill		5,645
Total Assets		10,845

Liabilities
Accounts payable		501
Accrued expenses		1,116
Deferred revenue		659
Deferred tax liability		472
Operating lease liability		1,502
Other liabilities		256
Total Liabilities		4,506
Net Assets Acquired	$	6,339

On August 23, 2021, the Company acquired 100% of edjuster Inc. in Canada and its U.S. subsidiary (collectively "edjuster"). edjuster is a technology-enabled, end-to-end contents services provider and platform. This acquisition will enable the Company to expand its capability in the North American claims contents services market. The purchase price included an initial cash payment of $21,000,000, net of working capital adjustments, and an earn-out potential up to $14,000,000 in cash based on the achievement of certain EBITDA performance goals over two one-year periods, beginning January 2022. The acquisition was funded primarily through additional borrowings under the Company’s credit facility.

This acquisition was accounted for under the guidance of ASC 805-10, as a business combination under the acquisition method. As a result of the acquisition, the Company recognized net assets of $1,834,000, goodwill of $9,670,000, and intangible assets of $11,700,000, including a tradename, a developed technology, customer relationships and non-compete agreements. Goodwill is attributable to the assembled workforce acquired, and expected revenue and cost synergies as a result of the combination of the companies. The Company does not expect that goodwill attributable to the acquisition will be deductible for tax purposes.

The preliminary acquisition accounting is based on the fair value of the acquisition consideration transferred to the sellers, assets acquired and liabilities assumed as of the acquisition date. At the acquisition date, the fair value of the contingent consideration payable was estimated to be $2,400,000. Significant assumptions and estimates included, but were not limited to future expected cash flows, including projected revenues and expenses, estimated customer attrition rates, royalty rates, and the applicable discount rates. These assumptions and estimates were level 3 inputs and based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

The Company is in the process of reviewing the fair value of the assets acquired and liabilities assumed, including, but not limited to accounts receivable, unbilled revenue, intangible assets, accrued expenses, tax liabilities and goodwill. As additional information becomes available, the Company may further revise its preliminary acquisition accounting during the remainder of the measurement period, which will not exceed 12 months from the date of acquisition. The Company may update certain assumptions and inputs to incorporate additional information obtained subsequent to the closing of the transaction related to facts and circumstances that existed as of the acquisition date.

The preliminary valuation of the assets acquired and liabilities assumed for edjuster on acquisition date as of September 30, 2021 is as follows:


(in thousands)	Opening Balance Sheet, as of September 30, 2021

Assets
Cash and cash equivalents	$	1,873
Accounts receivable, net		1,565
Unbilled revenue, at estimated billable amounts		1,531
Other current assets		166
Property and equipment, net		57
Operating lease right-of-use assets, net		418
Intangible assets		11,700
Goodwill		9,670
Other noncurrent assets		1,352
Total Assets		28,332

Liabilities
Accounts payable		137
Deferred tax liability		2,732
Operating lease liability		418
Other liabilities		1,642
Total Liabilities		4,929
Net Assets Acquired	$	23,403

On June 12, 2020, the Company sold its 51% interest in Lloyd Warwick International (“LWI”) for cash proceeds of $19,600,000 and payment of $3,600,000 to settle intercompany indebtedness. In the third quarter, the Company recognized an additional $700,000 related to net working capital adjustments under the terms of the acquisition agreement which increased the purchase price to $20,300,000. Due to the Company’s two-month reporting lag for reporting its international results, this transaction was recorded in the quarter ended September 30, 2020. The Company recognized a gain of $14,700,000 ($11,700,000 net of tax) on the disposition. The Company recognized an additional loss on the disposal of Crawford Compliance Inc. of $600,000 in the third quarter. Both of these disposals were in our then Crawford Specialty Solutions segment and resulted in a net gain of $0.21 per diluted share.