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Business Acquisitions | 9 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
Business Acquisitions | Business Acquisitions On October 31, 2019 (the "Acquisition Date"), the Company acquired all equity interests of General Workings, Inc. ("Streamlabs") for a total consideration of $105.7 million (as described in the table below), which included a working capital adjustment, plus additional contingent consideration of $29.0 million payable in stock only upon the achievement of certain net revenues for the period beginning on January 1, 2020 and ending on June 30, 2020 (the "Streamlabs Acquisition"). Streamlabs is a leading provider of software and tools for professional streamers. The Streamlabs Acquisition will be complementary to the Company's existing gaming portfolio. Streamlabs met the definition of a business, and therefore the acquisition is accounted for using the acquisition method. The fair value of consideration transferred for the Streamlabs Acquisition consists of the following (in thousands):
Purchase price (cash) |  | $ | 105,645 |
Fair value of contingent consideration (earn-out) |  | 37 |
Fair value of total consideration transferred |  | $ | 105,682 |
The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the Acquisition Date (in thousands):
|  | Estimated Fair Value
Cash and cash equivalents |  | $ | 17,014 |
Intangible assets |  | 37,000 |
Other identifiable liabilities assumed, net |  | (3,635 | )
Net identifiable assets acquired |  | 50,379 |
Contingent consideration (earn-out) |  | (37 | )
Goodwill |  | 55,340 |
Net assets acquired |  | $ | 105,682 |
Goodwill related to the acquisition is primarily attributable to opportunities and economies of scale from combining the operations and technologies of Logitech and Streamlabs, and is not deductible for tax purposes. The following table summarizes the preliminary estimated fair values and estimated useful lives of the components of identifiable intangible assets acquired as of the Acquisition Date (Dollars in thousands):
| Preliminary Fair Value |  | Estimated Useful Life (years)
Developed technology | $ | 21,800 |  |  | 6.0
Customer relationships | 6,000 |  |  | 2.0
Trade name | 9,200 |  |  | 8.0
Total identifiable intangible assets acquired | $ | 37,000 |  |  | 5.9
Intangible assets acquired as a result of the Streamlabs Acquisition are being amortized over their estimated useful lives using the straight-line method of amortization, which materially approximates the distribution of the economic value of the identified intangible assets. Amortization of acquired developed technology of $0.6 million during the three months ended December 31, 2019 is included in amortization of intangible assets and purchase accounting effect of inventory in the condensed consolidated statements of operations. Amortization of the acquired customer relationships and trade name of $0.7 million during the three months ended December 31, 2019 is included in amortization of intangible assets and acquisition-related costs in the condensed consolidated statements of operations. Developed technology relates to the software platform which existing Streamlabs services is provided on. The economic useful life was determined based on the technology cycle related to developed technology of the software platform, as well as the cash flows anticipated over the forecasted periods. Customer relationships represent the fair value of future projected revenue that will be derived from sales to existing customers of Streamlabs. The economic useful life was determined based on historical customer turnover rates and industry benchmarks. Trade name relates to the “Streamlabs” trade name. The economic useful life was determined based on the expected life of the trade name and the cash flows anticipated over the forecasted periods. The fair value of developed technology was estimated using the excess earnings method, an income approach (Level 3), which converts projected revenues and costs into cash flows. To reflect the fact that certain other assets contributed to the cash flows generated, the returns for these contributory assets were removed to arrive at estimated cash flows solely attributable to the developed technology, which were discounted at a rate of 25%. The fair value of trade name was estimated using the relief-from-royalty method, an income approach (Level 3), which estimates the cost savings that accrue to the owner of the intangible assets that would otherwise be payable as royalties or license fees on revenues earned through the use of the asset. A royalty rate is applied to the projected revenues associated with the intangible assets to determine the amount of savings, which is then discounted to determine the fair value. Trade name was valued using royalty rate of 5% and was discounted at a rate of 25%. The fair value of customer relationships was estimated primarily using the with and without scenario, a discounted cash flow method (Level 3). Under this method, the Company calculated the present value of the after-tax cash flows expected to be generated by the business with and without the customer relationships using a discount rate of 20%. The without scenario incorporates lost revenue and lost profits over the period necessary to retain the asset. The Company believes the preliminary fair values of acquired intangible assets recorded above represents their fair values and approximates the amounts a market participant would pay for these intangible assets as of the Acquisition Date. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of the acquisition. As additional information becomes available, such as finalization of the estimated fair value of the tangible assets acquired and liabilities assumed, and working capital adjustments that may affect the total consideration transferred, the Company may revise its preliminary estimates of fair values during the remainder of the measurement period (which will not exceed 12 months from the Acquisition Date). Any such revisions or changes may be material as the Company finalizes the fair values of the tangible and intangible assets acquired and liabilities assumed. The Company incurred acquisition-related costs for the Streamlabs Acquisition of approximately $0.8 million and $1.4 million during the three and nine months ended December 31, 2019, respectively. The acquisition-related costs are included in amortization of intangible assets and acquisition-related costs in the condensed consolidated statements of operations. The Company included Streamlabs' estimated fair value of assets acquired and liabilities assumed in its condensed consolidated financial statements beginning on the Acquisition Date. The results of operations for Streamlabs subsequent to the Acquisition Date have been included in, but are not material to, the Company's condensed consolidated statements of operations for the three and nine months ended December 31, 2019. Pro forma results of operations for the Streamlabs Acquisition have not been presented because they are not material to the condensed consolidated statements of operations for the three and nine months ended December 31, 2019. Streamlabs contributed $4.1 million to the net sales for the three and nine months ended December 31, 2019, representing less than one percent of the Company's net sales for each of the respective periods. On October 31, 2019, the Company also made an immaterial technology acquisition for a total cash consideration of $3.6 million, which was accounted for using the acquisition method. The Company retained 10% of the total consideration for the purpose of ensuring seller's representations and warranties.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: 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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