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Acquisitions | 12 Months Ended
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Dec. 31, 2020
Business Combinations [Abstract] |
Acquisitions | Note 2 – Acquisitions 2019 SiriusDecisions On January 3, 2019, Forrester acquired 100% of the issued and outstanding shares of SiriusDecisions, Inc. (“SiriusDecisions”), a privately-held company based in Wilton, Connecticut with approximately 350 employees globally. SiriusDecisions equips business-to-business (“B2B”) sales, marketing, and product leaders with the actionable research, frameworks, tools, operational benchmarks and expert advice they need to maximize performance and drive alignment. The acquisition creates several opportunities for the Company, including cross-selling services to the Company’s respective client bases, extending SiriusDecisions’ platform, methodologies, data, and best-practices tools into new roles, and accelerating international and industry growth. The acquisition of SiriusDecisions was determined to be an acquisition of a business under the provisions of Topic 805. Pursuant to the terms of the merger agreement, the Company paid $246.8 million at closing after certain transaction expense adjustments, which was subject to a working capital adjustment, and included the purchase price of $245.0 million plus an estimate of cash acquired and reduced by an estimate of certain working capital items. At the time of the merger, each vested SiriusDecisions stock option was converted into the right to receive the excess of the per share merger consideration over the exercise price of such stock option. All unvested SiriusDecisions stock options were cancelled without payment of any consideration. Total Consideration Transferred The following table summarizes the fair value of the aggregate consideration paid for SiriusDecisions (in thousands):
Cash paid at close (1) |  | $ | 246,801 |
Working capital adjustment (2) |  |  | (1,259 | )
Total |  | $ | 245,542 |
(1) | The cash paid at close represents the gross contractual amount paid. Net cash paid, which accounts for the cash acquired of $7.9 million and the working capital adjustment of $1.3 million, was $237.7 million and is reflected as an investing activity in the Consolidated Statements of Cash Flows.
(2) | Amount represents the final amount receivable from the sellers based upon working capital as defined, which was received in 2019.
Allocation of Purchase Price The following table summarizes the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the acquisition of SiriusDecisions (in thousands):
Assets: |  |  |  |
Cash and cash equivalents |  | $ | 7,858 |
Accounts receivable |  |  | 19,237 |
Prepaids and other current assets |  |  | 3,660 |
Property and equipment |  |  | 4,169 |
Goodwill (1) |  |  | 158,569 |
Intangible assets (2) |  |  | 115,000 |
Other assets |  |  | 418 |
Total assets |  |  | 308,911 |
Liabilities: |  |  |  |
Accounts payable and other current liabilities |  |  | 8,924 |
Deferred revenue |  |  | 26,143 |
Deferred tax liability |  |  | 26,226 |
Long-term deferred revenue |  |  | 1,037 |
Other long-term liabilities |  |  | 1,039 |
Total liabilities |  |  | 63,369 |
Net assets acquired |  | $ | 245,542 |
(1) | Goodwill represents the expected revenue and cost synergies from combining SiriusDecisions with Forrester as well as the value of the acquired workforce.
(2) | All of the 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, and replacement cost valuation methodologies. The 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. The replacement cost methodology required the use of estimates in determining the costs to replace the assets and the amount of obsolescence existing at the time of the acquisition. 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 $115.0 million assigned to intangible assets, $13.0 million was assigned to the technology asset class with useful lives of 1 to 8 years (with a weighted average amortization period of 3.2 years), $13.0 million to backlog with a useful life of 2 years, $77.0 million to customer relationships with a useful life of 9.25 years, and $12.0 million to trademarks with an original useful life of 15.5 years. The weighted-average amortization period of all intangible assets was originally 8.4 years.
The Company’s financial statements include the operating results of SiriusDecisions beginning on January 3, 2019, the date of the acquisition. SiriusDecisions’ operating results were being reported as its own operating segment prior to the Company’s segment realignments (refer to Note 12 – Operating Segment and Enterprise Wide Reporting for more information on the segment changes). The goodwill is not deductible for income tax purposes and was allocated to the SiriusDecisions and Research operating segments in the amounts of $142.5 million and $16.0 million, respectively, prior to the segment realignments. The acquisition of SiriusDecisions added approximately $79.3 million of additional revenue and $103.9 million of direct expenses, including intangible amortization, for the year ended December 31, 2019. Had the Company acquired SiriusDecisions in prior periods, the Company’s operating results would have been materially different, and as a result the following unaudited pro forma financial information is presented as if SiriusDecisions had been acquired by the Company on January 1, 2018 (in thousands):
|  | Years Ended |
|  | December 31, |
|  | 2019 |  |  | 2018 |
Pro forma total revenue |  | $ | 472,810 |  |  | $ | 438,049 |
Pro forma net income (loss) |  | $ | 733 |  |  | $ | (10,069 | )
The pro forma results have been prepared in accordance with U.S. GAAP and include the following pro forma adjustments in 2018: (1) an increase in interest expense and amortization of debt issuance costs related to the financing of the SiriusDecisions acquisition (refer to Note 4 – Debt for further information on the Company’s borrowings related to the acquisition); (2) a decrease in revenue as a result of the fair value adjustment to deferred revenue; and (3) an adjustment for depreciation and amortization expenses as a result of the purchase price allocation for finite-lived intangible assets and property and equipment. In addition, the year ended December 31, 2018 has been adjusted to increase operating costs to recognize acquisition costs incurred upon the close of the acquisition. The year ended December 31, 2019 has been adjusted to add the year two amounts, and eliminate the year one amounts, for the fair value of deferred revenue, depreciation and amortization expense and interest expense. In addition, the year ended December 31, 2019 has been adjusted to eliminate the acquisition costs incurred upon the close of the acquisition. 2018 FeedbackNow On July 6, 2018, Forrester acquired 100% of the issued and outstanding shares of S.NOW SA, a Switzerland-based business that operates as FeedbackNow. FeedbackNow is a maker of physical buttons and monitoring software that companies deploy to measure, analyze, and improve customer experience. The acquisition is part of Forrester's plan to build a real-time customer experience (“CX”) cloud solution. FeedbackNow provides a high-volume input source for the real-time CX cloud solution. The acquisition of FeedbackNow was determined to be an acquisition of a business under the provisions of Topic 805. The Company paid $8.4 million on the closing date. As discussed below, during 2020 and 2019, the Company paid additional amounts for the acquired working capital, indemnity holdback (payable over a two-year period from the closing), and contingent consideration (based on the financial performance of FeedbackNow during the two-year period following the closing date). Total Consideration Transferred The following table summarizes the fair value of the aggregate consideration payable for FeedbackNow as of the acquisition date (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, and was paid to the sellers in 2019.
(3) | $1.0 million and $0.5 million of the holdback was paid during 2020 and 2019, respectively.
(4) | The acquisition of FeedbackNow included a contingent consideration arrangement that required 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. The fair value of this contingent consideration arrangement on the acquisition date was $3.4 million, which was recognized as purchase price. $2.7 million and $1.8 million was paid during 2020 and 2019, respectively, as a result of FeedbackNow meeting the financial performance targets. Refer to Note 7 – Fair Value Measurements for further discussion.
Allocation of Purchase Price The following table summarizes the 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 |
Intangible assets (2) |  |  | 4,780 |
Other assets |  |  | 75 |
Total assets |  |  | 16,056 |
Liabilities: |  |  |  |
Accounts payable and other current 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 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 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 trademarks with a useful life of 8.5 years. The weighted-average amortization period of all intangible assets is 4.8 years.
The Company's financial statements include the operating results of FeedbackNow beginning on July 6, 2018, the date of acquisition. FeedbackNow's operating results and goodwill were reported within the Company's Research segment prior to the Company’s segment realignments (refer to Note 12 – Operating Segment and Enterprise Wide Reporting for more information on the segment changes). The goodwill is not deductible for income tax purposes. GlimpzIt On June 22, 2018, Forrester acquired substantially all of the assets of SocialGlimpz, Inc. (“GlimpzIt”), an artificial intelligence and machine-learning provider based in San Francisco. The acquisition is part of Forrester's plan to build a real-time CX cloud solution, integrating a range of inputs to help companies monitor and improve customer experience. Forrester intends to deploy the GlimpzIt technology to extend the analytics engine in Forrester’s planned real-time CX cloud. The acquisition of GlimpzIt was determined to be an acquisition of a business under the provisions of Topic 805. The total purchase price was approximately $1.3 million, which was paid in cash on the closing date. The acquired working capital was insignificant. The acquisition also required Forrester to pay up to an additional $0.3 million in cash, contingent on the achievement of certain employment conditions by key employees during the two year period from the acquisition date. This amount was recognized as compensation expense over the related service period. During 2020 and 2019, Forrester paid $0.2 million and $0.1 million, respectively as a result of the employment conditions being met. The purchase price was allocated as $0.7 million of goodwill and $0.6 million of an intangible asset representing technology, which is being amortized over its estimated useful life of 5 years. Goodwill was recorded within the Research segment prior to the Company’s segment realignments (refer to Note 12 – Operating Segment and Enterprise Wide Reporting for more information on the segment changes), and is deductible for income tax purposes. Goodwill is attributable to the acquired workforce as well as future synergies. Acquisition and Integration Costs Acquisition and integration costs consist of direct and incremental costs to acquire and integrate acquired companies. The company recognized $5.8 million, $8.9 million, and $3.8 million of acquisition and integration costs during 2020, 2019, and 2018, respectively. The costs primarily consisted of investment banker fees, legal fees, regulatory costs, accounting and tax professional fees, and costs of abandoning unused facilities.

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