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ACQUISITIONS | 12 Months Ended
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Dec. 31, 2020
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS | ACQUISITIONS 2020 Acquisitions In January 2020, we acquired certain assets of a payroll business. The aggregate initial purchase price for the assets was $2,153 which included a cash payment of $1,724, which we paid for in cash at closing, a custodial account hold back of $99 and a promissory note of $330, with principal and interest due in April 2021. The Company accounted for this as an asset acquisition. In July 2020, we acquired certain assets of a payroll tax business. The initial purchase price for the assets was $4,250, which we paid for in cash at closing. The seller will be paid additional consideration for the assets based on the trailing twelve-month revenue from the acquired assets at each of April 30, 2021 and October 31, 2021. Subject to any disagreement as to the calculation of the contingent purchase consideration, payments for contingent purchase consideration, if any, will be made by May 30, 2021 and December 30, 2021. In December 2020, we acquired certain assets of two payroll businesses and an HR consulting business. The aggregate initial purchase price for the assets was $8,212, which included a cash payment of $7,365 at closing and promissory notes of $847, with principal and interest due in July 2022. Purchase Price Allocation Following is the purchase price allocation for the 2020 business acquisitions. We based the preliminary fair value estimate for the assets acquired and liabilities assumed for these acquisitions upon preliminary calculations and valuations. Our estimates and assumptions for these acquisitions are subject to change as we obtain additional information for our estimates during the respective measurement periods (up to one year from the acquisition date). The primary areas of those preliminary estimates that we have not yet finalized relate to certain tangible assets and liabilities acquired, and income and non-income based taxes. We recorded the transactions using the acquisition method of accounting and recognized assets and liabilities assumed at their fair value as of the dates of acquisitions. The $11,853 of intangible assets subject to amortization consist of $9,753 allocated to Customer Relationships, $2,000 for Developed Technology, and $100 for Trade Names. To value the Trade Names, we employed the relief from royalty method under the market approach. For the Customer Relationships and Developed Technology, we employed a form of the excess earnings method, which is a form of the income approach. We believe significant synergies are expected to arise from these strategic acquisitions. This factor contributed to a purchase price that was in excess of the fair value of the net assets acquired and, as a result, we recorded goodwill for each acquisition. A portion of acquired goodwill will be deductible for tax purposes.
|  | Total
Cash & cash equivalents |  | $ | 196 |
Accounts receivable |  | 48 |
Fixed assets |  | 2 |
Funds held for clients |  | 5,505 |
Goodwill |  | 5,261 |
Intangibles |  | 11,853 |
Total assets acquired |  | $ | 22,865 |
Client fund obligations |  | $ | 5,505 |
Total liabilities assumed |  | 5,505 |
Net assets acquired |  | $ | 17,360 |
The following is a reconciliation of the purchase price to the fair value of net assets acquired at the date of acquisition:
|  | Total
Purchase price |  | $ | 13,339 |
Notes payable |  | 1,177 |
Custodial hold back |  | 99 |
Adjustment to fair value of contingent liability |  | 2,745 |
Fair value of net assets acquired |  | $ | 17,360 |
Contingent consideration In connection with the acquisition of certain assets of the payroll tax business in July 2020, we recorded contingent consideration based upon the expected achievement of certain milestone goals. We will record any changes to the fair value of contingent consideration due to changes in assumptions used in preparing the valuation model in selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income (Loss). Contingent consideration is valued using a multi-scenario discounted cash flow method. The assumptions used in preparing the discounted cash flow method include estimates for outcomes if milestone goals are achieved and the probability of achieving each outcome. Management estimates probabilities and then applies them to management’s conservative case forecast, most likely case forecast and optimistic case forecast with the various scenarios. The Company retained a third-party expert to assist in determining the value of the contingent consideration for the third quarter 2020. As of September 30, 2020, the third-party expert determined the value of the contingent consideration for the acquisition was $2,745 based on a Monte Carlo simulation model for fiscal 2020 to 2021. At December 31, 2020, we increased the amount to $3,880 based on a discounted cash flow model for fiscal 2020 to 2021.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: 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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