ACQUISITION AND DIVESTITURE

Acquisition

Effective June 12, 2018, we acquired all of the outstanding equity interests of TMP Holdings LTD (“TMP”), through our PeopleScout subsidiary, for a cash purchase price of $22.7 million, net of cash acquired of $7.0 million. TMP is a mid-sized recruitment process outsourcing (“RPO”) and employer branding service provider operating in the United Kingdom, which is the second largest RPO market in the world. This acquisition increases our ability to win multi-continent engagements by adding a physical presence in Europe, referenceable clients and employer branding capabilities.

We incurred acquisition and integration-related costs of $1.2 million and $1.7 million for the thirteen and thirty-nine weeks ended September 30, 2018, respectively, which are included in selling, general and administrative expense on the Consolidated Statements of Operations and Comprehensive Income and cash flows from operating activities on the Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 30, 2018.

The following table reflects our preliminary allocation of the purchase price, net of cash acquired, to the fair value of the assets acquired and liabilities assumed:



(in thousands)	Purchase price allocation
Cash purchase price, net of cash acquired	$	22,742
Purchase price allocated as follows:
Accounts receivable	9,770
Prepaid expenses, deposits and other current assets	337
Property and equipment	435
Customer relationships	6,286
Trade names/trademarks	1,738
Total assets acquired	18,566
Accounts payable and other accrued expenses	9,139
Accrued wages and benefits	1,642
Income tax payable	205
Deferred income tax liability	1,444
Total liabilities assumed	12,430
Net identifiable assets acquired	6,136
Goodwill (1)	16,606
Total consideration allocated	$	22,742

(1) Goodwill represents the expected synergies with our existing business, the acquired assembled workforce, potential new customers and future cash flows after the acquisition of TMP, and is non-deductible for income tax purposes.

Intangible assets include identifiable intangible assets for customer relationships and trade names/trademarks. We estimated the fair value of the acquired identifiable intangible assets, which are subject to amortization, using the income approach.

The following table sets forth the components of identifiable intangible assets, their estimated fair values and useful lives as of June 12, 2018:



(in thousands, except for estimated useful lives, in years)	Estimated fair value		Estimated useful life in years
Customer relationships	$	6,286	3-7
Trade names/trademarks	1,738		14
Total acquired identifiable intangible assets	$	8,024

The acquired assets and assumed liabilities of TMP are included on our Consolidated Balance Sheet as of September 30, 2018, and the results of its operations and cash flows are reported on our Consolidated Statements of Operations and Comprehensive Income and Consolidated Statements of Cash Flows for the period from June 12, 2018 to September 30, 2018. The amount of revenue from TMP included in our Consolidated Statements of Operations and Comprehensive Income was $17.9 million from the acquisition date to September 30, 2018. The acquisition of TMP was not material to our consolidated results of operations and as such, pro forma financial information was not required.

Divestiture

Effective March 12, 2018, we entered into an asset purchase agreement to sell substantially all the assets and certain liabilities of PlaneTechs, LLC (“PlaneTechs”) to Launch Technical Workforce Solutions (“Launch”) for a preliminary purchase price of $11.4 million, of which $8.5 million was paid in cash, and $1.6 million in a note receivable due within nine months following the closing date. The note receivable has monthly principal payments of $0.1 million, which began in April 2018, and will continue through December 2018. The outstanding balance is included in prepaid expenses, deposits and other current assets on the Consolidated Balance Sheets. The remaining purchase price balance consists of the preliminary working capital adjustment, which is expected to be paid in cash during the fiscal fourth quarter of 2018 and is included in prepaid expenses, deposit and other current assets on the Consolidated Balance Sheets. The company recognized a preliminary pre-tax gain on the divestiture of $0.7 million, which is included in interest and other income on the Consolidated Statements of Operations and Comprehensive Income for the thirty-nine weeks ended September 30, 2018. Fiscal first quarter revenue through the closing date of the divestiture for the PlaneTechs business of $8.0 million was reported in the PeopleManagement reportable segment.

The divestiture of PlaneTechs did not represent a strategic shift with a major effect on the company’s operations and financial results and, therefore was not reported as discontinued operations in the Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Income for the periods presented.

The company has agreed to provide certain transition services to Launch for a period not to exceed nine months, which includes various back office services to support the PlaneTechs branch offices until personnel and systems are transferred to Launch.