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HELD-FOR-SALE-CLASSIFICATION

9 Months Ended

Sep. 30, 2024

HELD-FOR-SALE-CLASSIFICATION

HELD-FOR-SALE-CLASSIFICATION

NOTE 5—HELD-FOR-SALE-CLASSIFICATION

In September 2024, the Company entered into an agreement to sell the Automation service line to UST for $27 million, of which $20 million will be paid in cash and $7 million will be held in escrow to be released upon the completion of certain conditions specified in the final agreement which include achievement of revenue milestones through the first quarter of 2025 and obtaining client consents by the end of the fourth quarter of 2024. The assets and liabilities of the Automation service line have been classified as held for sale in the Consolidated Balance Sheet as of September 30, 2024 and are measured at the lower of it carrying amount or fair value less costs to sell. The sale closed in the fourth quarter of 2024. The Company expects that the sale proceeds less costs to sell will exceed the preliminary estimate of the carrying value of the net assets for the business. The sale consideration is subject to certain post-closing adjustments, which primarily relate to cash, indebtedness and working capital balances.

The following table summarizes the components of assets and liabilities held-for-sale on the Consolidated Balance Sheet:


			September 30,
			2024
Accounts receivable and contract assets, net of allowance			15,956
Prepaid expenses and other current assets			105
Assets held for sale- current assets			16,061
Goodwill			9,727
Intangible assets			6,448
Deferred tax assets			37
Assets held for sale non-current assets			16,212
Total Assets held for sale			32,273

Accounts payable			1,168
Contract liabilities			185
Accrued expenses and other current liabilities			6,496
Assets held for sale current liabilities			7,849
Other liabilities			2,872
Assets held for sale non-current liabilities			2,872
Total Liabilities held for sale			10,721

As a result of the agreement to sell the Automation service line to UST in September 2024, the Company allocated goodwill to the Automation service line using a relative fair value method. In addition, we completed an assessment of any potential goodwill impairment immediately prior and subsequent to the allocation and determined that no impairment existed. We estimated the fair value of the Automation service line based on the terms and conditions of the sales agreement with UST which primarily reflected $20.0 million in cash, a fair value estimate of the $7.0 million held in escrow and an estimate for a working capital adjustment. The fair value of the amounts held in escrow was estimated based on the probability of achieving revenue targets per the agreement based on forecasted revenues and of obtaining the required consents from clients. As the escrow periods per the agreement are both less than 12 months, the fair value estimates related to these amounts were not present valued. The amounts received from escrow are subject to change based on results. Based on the valuations performed over the Automation service line and the remaining business, the fair values were determined to be in excess of the carrying value and therefore there was no impairment.