Acquisitions

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

The aggregate details of the Company’s acquisition activity are as follows:


	Acquisitions Completed during
	Three Months Ended
	March 31,
	2023		2022


Number of acquisitions	1		1
Cash paid at closing (1)	$	10,299	$	715,114
Cash acquired	—		(19,146)
Net cash paid	$	10,299	$	695,968

(1)Of the cash paid at closing for the three months ended March 31, 2022, $3,000 was deposited into an escrow account to secure any potential indemnification and other obligations of the seller.

On January 31, 2022, the Company completed the acquisition of Power Line Systems (“PLS”), a leader in software for the design of overhead electric power transmission lines and their structures, for $695,968 in cash, net of cash acquired. The operating results of the acquired businesses were not material, individually or in the aggregate, to the Company’s consolidated statements of operations.

The fair value of the contingent consideration from acquisitions is included in the consolidated balance sheets as follows:


	March 31, 2023		December 31, 2022


Accruals and other current liabilities	$	955	$	1,196

Contingent consideration from acquisitions	$	955	$	1,196

The fair value of non-contingent consideration from acquisitions is included in the consolidated balance sheets as follows:


	March 31, 2023		December 31, 2022


Accruals and other current liabilities	$	2,861	$	2,434
Other liabilities	3,061		2,977
Non-contingent consideration from acquisitions	$	5,922	$	5,411

The operating results of the acquired businesses are included in the Company’s consolidated financial statements from the closing date of each respective acquisition. The purchase price for each acquisition has been allocated to the net tangible and intangible assets and liabilities based on their estimated fair values at the respective acquisition date.

The Company is in the process of finalizing the purchase accounting for one acquisition completed during the three months ended March 31, 2023 and one acquisition completed during the year ended December 31, 2022. Identifiable assets acquired and liabilities assumed were provisionally recorded at their estimated fair values on the respective acquisition date. The initial accounting for these business combinations is not complete because the evaluation necessary to assess the fair values of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified from the date of the acquisition as more information is obtained about the fair values of assets acquired and liabilities assumed, however, such measurement period cannot exceed one year.Acquisition costs are expensed as incurred and are recorded in General and administrative in the consolidated statements of operations. For the three months ended March 31, 2023 and 2022, the Company’s acquisition expenses were $5,185 and $10,574, respectively, which include costs related to legal, accounting, valuation, insurance, general administrative, and other consulting and transaction fees. For the three months ended March 31, 2022, $9,773 of the Company’s acquisition expenses related to the acquisition of PLS.

The following summarizes the fair values of the assets acquired and liabilities assumed, as well as the weighted average useful lives assigned to acquired intangible assets at the respective date of each acquisition (including contingent consideration):


	Acquisitions Completed in
	Three Months Ended		Year Ended
	March 31, 2023		December 31, 2022
Consideration:
Cash paid at closing	$	10,299	$	763,228

Contingent consideration	—		1,390
Deferred, non-contingent consideration, net	525		749
Other	—		(269)
Total consideration	$	10,824	$	765,098
Assets acquired and liabilities assumed:
Cash	$	—	$	20,221
Accounts receivable and other current assets	1,488		8,890
Operating lease right-of-use assets	345		1,237
Property and equipment	—		1,316
Other assets	—		7
Software and technology (weighted average useful life of 3 and 5 years, respectively)	1,300		10,608
Customer relationships (weighted average useful life of 6 and 10 years, respectively)	3,900		82,278
Trademarks (weighted average useful life of 5 and 8 years, respectively)	800		6,972


Total identifiable assets acquired excluding goodwill	7,833		131,529
Accruals and other current liabilities	—		(4,079)
Deferred revenues	(3,953)		(14,176)
Operating lease liabilities	(345)		(1,237)
Deferred income taxes	—		(5,745)

Total liabilities assumed	(4,298)		(25,237)
Net identifiable assets acquired excluding goodwill	3,535		106,292
Goodwill	7,289		658,806
Net assets acquired	$	10,824	$	765,098

The fair values of the working capital, other assets (liabilities), and property and equipment approximated their respective carrying values as of the acquisition date.

Deferred revenues were determined in accordance with the Company’s revenue recognition policies.

The fair values of the intangible assets were primarily determined using the income approach. When applying the income approach, indications of fair values were developed by discounting future net cash flows to their present values at market‑based rates of return. The cash flows were based on estimates used to price the acquisitions and the discount rates applied were benchmarked with reference to the implied rate of return from the Company’s pricing model and the weighted average cost of capital.

Goodwill recorded in connection with the acquisitions was attributable to synergies expected to arise from cost saving opportunities, as well as future expected cash flows. The Company expects $7,289 of the goodwill recorded relating to the 2023 acquisition will be deductible for income tax purposes.