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Acquisitions (Tables) - FeedbackNow [Member]

12 Months Ended

Dec. 31, 2018

Summary of Fair Value of Aggregate Consideration Paid or Payable

The following table summarizes the fair value of the aggregate consideration paid or payable for FeedbackNow (in thousands):

Cash paid at close (1)	$	8,425
Working capital adjustment (2)		798
Indemnity holdback (3)		1,485
Contingent purchase price (4)		3,388
Total	$	14,096

(1)	The cash paid at close represents the gross contractual amount paid. Net cash paid, which accounts for the cash acquired of $0.5 million, was $8.0 million and is reflected as an investing activity in the Consolidated Statements of Cash Flows.

(2)	Represents the amount payable to the sellers based upon working capital as defined, which was paid to the sellers during the first quarter of 2019.

(3)	Approximately $0.5 million and $1.0 million of the holdback is expected to be paid during 2019 and 2020, respectively.

(4)

The acquisition of FeedbackNow includes a contingent consideration arrangement that requires additional consideration to be paid to the sellers based on the financial performance of FeedbackNow during the two-year period subsequent to the closing date. Up to $1.7 million and $2.5 million could be payable during 2019 and 2020, respectively, if the financial targets are met. The range of undiscounted amounts that could be payable under this arrangement is zero to $4.2 million. This range of amounts payable has not changed since the acquisition. The provisional fair value of the contingent consideration recognized on the acquisition date, which represents purchase price, was $3.0 million. During the fourth quarter of 2018, the Company recorded a $0.4 million increase to the initial value of the contingent consideration representing additional purchase price, as a result of finalizing its acquisition date fair value assessment during the measurement period. This adjustment resulted in a final acquisition date fair value of $3.4 million for the contingent consideration. The fair value was based on a Monte Carlo simulation and included significant Level 3 inputs not observable in the market including projected contract bookings, a discount rate of 23.7%, and revenue volatility of 20.8%. See further discussion in Note 6 – Fair Value Measurements.

Summary of Preliminary Allocation of Purchase Price to Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the acquisition of FeedbackNow (in thousands):

Assets:
Cash	$	463
Accounts receivable		738
Prepaids and other current assets		487
Goodwill (1)		9,513
Acquired intangible assets (2)		4,780
Other assets		75
Total assets		16,056
Liabilities:
Accounts payable and accrued liabilities		837
Contract liabilities		298
Deferred tax liability		825
Total liabilities		1,960
Net assets acquired	$	14,096

(1)	Goodwill represents the expected synergies from combining FeedbackNow with Forrester as well as the value of the acquired workforce.

(2)

All of the acquired intangible assets are finite-lived. The determination of the fair value of the finite-lived intangible assets required management judgment and the consideration of a number of factors. In determining the fair values, management primarily relied on income valuation methodologies, in particular discounted cash flow models. The use of discounted cash flow models required the use of estimates, including projected cash flows related to the particular asset; the useful lives of the particular assets; the selection of royalty and discount rates used in the models; and certain published industry benchmark data. In establishing the estimated useful lives of the acquired intangible assets, the Company relied primarily on the duration of the cash flows utilized in the valuation model. Of the $4.8 million assigned to acquired intangible assets, $3.0 million was assigned to the technology asset class with a useful life of 6.5 years, $1.3 million to customer relationships with useful lives of 4.5 years to 7.5 years (with a weighted average amortization period of 6.1 years), and $0.5 million to trade names with a useful life of 8.5 years. The weighted-average amortization period for the total acquired intangible assets is 4.8 years. Amortization of acquired intangible assets was $0.4 million for the year ended December 31, 2018.