Acquisitions

12 Months Ended

Dec. 31, 2011

Acquisitions

Acquisitions

Note 5—Acquisitions

Black Diamond Performance Reporting LLC ("Black Diamond")

        On June 1, 2011, Advent acquired all the outstanding ownership units of Black Diamond, a privately held, Florida-based company which now operates as a wholly owned subsidiary of the Company. Black Diamond provides web-based, outsourced portfolio management and reporting platforms for investment advisors. The total purchase price of $72.4 million, net of cash acquired of $0.2 million, was paid in cash. Of the total purchase price, $7.0 million was placed into escrow until December 2012 to be held as partial security for any losses incurred by the Company in the event of certain breaches of the representation and warranties contained in the acquisition agreement or certain other events. Pro forma results of operations have not been presented because the effect of the acquisition was not material to the Company's consolidated results of operations.

• Purchase Price Allocation

        The acquisition was accounted for in accordance with the purchase method of accounting. The total purchase price was allocated to net tangible and intangible assets based on their estimated fair values as of June 1, 2011. The fair value assigned to identifiable intangible assets acquired has been determined primarily by using valuation methods that discount expected future cash flows to present value using estimates and assumptions determined by management. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill, which is fully deductible for income tax purposes.

        The allocation of the purchase price and the estimated useful lives associated with certain assets was as follows:

	Estimated Life (Years)		Purchase Price Allocation (in thousands)
Identifiable intangible assets (liabilities):
Developed research and development		5	$	13,200
Customer relationships		7		11,300
Trade name and trademarks		5		1,300
Non-competition agreements		3		1,100
Industry partner agreements		5		500
Goodwill				44,215
Deferred revenues				(230	)
Net tangible assets				1,059
Purchase price, net of cash acquired			$	72,444

Tangible assets and current liabilities

        Black Diamond's tangible assets and liabilities as of June 1, 2011 were reviewed and adjusted to their fair value as necessary. Current assets are primarily comprised of accounts receivable and prepaids. Non-current assets were primarily comprised of facility deposits and fixed assets. Current liabilities include accrued liabilities, accrued compensation and benefits, sales commissions payable, sales tax payable and deferred revenues. In connection with the acquisition of Black Diamond, Advent assumed Black Diamond's contractual obligations related to its deferred revenues. Black Diamond's deferred revenues were derived primarily from set up fees related to the implementation of its web-based services and from contracts where revenue is recognized upon completion of the project. Advent recorded an adjustment to reduce the carrying value of deferred revenues to represent the Company's estimate of the fair value of the contractual obligations assumed.

Syncova Solutions Ltd. ("Syncova")

        On February 28, 2011, Advent acquired all the outstanding shares of Syncova, a privately held, United Kingdom-based company, which now remains as a wholly-owned subsidiary of the Company. Syncova provides margin management and financing software to hedge funds and prime brokers. Syncova's solutions enable hedge funds and prime brokers to calculate expected margin, reconcile and control differences. Syncova's product offerings will be a part of Advent's solution for the alternative and high end asset management markets. The total purchase price of $24.6 million, net of cash acquired of $0.8 million, was paid in cash. Of the total proceeds, the equivalent of $4.8 million will be held in escrow subject to claims through February 2013. Pro forma results of operations have not been presented because the effect of the acquisition was not material to the Company's consolidated results of operations.

Purchase Price Allocation

        The acquisition was accounted for in accordance with the purchase method of accounting. The total purchase price was allocated to net tangible and intangible assets based on their estimated fair values as of February 28, 2011. The fair value assigned to identifiable intangible assets acquired has been determined primarily by using valuation methods that discount expected future cash flows to present value using estimates and assumptions determined by management. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill, which is fully deductible for income tax purposes.

        The allocation of the purchase price and the estimated useful lives associated with certain assets was as follows:

	Estimated Useful Life (Years)		Purchase Price Allocation (in thousands)
Identifiable intangible assets:
Developed research and development		6	$	8,580
In-process research and development		*		1,133
Customer relationships		8		2,104
Non-competition agreements		3		162
Goodwill				15,991
Deferred tax asset				1,128
Deferred tax liability				(2,996	)
Deferred revenues				(2,035	)
Net tangible assets				581
Purchase price, net of cash acquired			$	24,648

*

In-process research and development relates to costs attributed to a product version that was released in the fourth quarter of 2011 and is being amortized on a straight-line basis over the useful life of 3 years.

Tangible assets and current liabilities

        Syncova's tangible assets and liabilities as of February 28, 2011 were reviewed and adjusted to their fair value as necessary. Current assets are primarily comprised of accounts receivable and deferred tax assets. Non-current assets were primarily comprised of facility deposits and fixed assets. Current liabilities include accrued liabilities, deferred tax assets and deferred revenues. In connection with the acquisition of Syncova, Advent assumed Syncova's contractual obligations related to its deferred revenues. Syncova's deferred revenues were derived primarily from term license arrangements, and service and maintenance related to perpetual licenses. As a result, Advent recorded an adjustment to reduce the carrying value of deferred revenues to represent the Company's estimate of the fair value of the contractual obligations assumed.