4. Consolidated Businesses

Folio Dynamix Acquisition

On November 3, 2014, Actua acquired all of the issued and outstanding stock of FolioDynamix for approximately $205.8 million, (which included $0.7 million as a working capital adjustment occurred in the first quarter of 2015) in cash and $1.4 million of equity value related to rolled stock options. The $1.4 million fair value of the rolled stock options was determined using a Black-Scholes model that, given the relatively short expected term applied to the model, essentially approximated the intrinsic value of these awards. Actua allocated the purchase price to the acquired tangible and identifiable intangible assets and liabilities based upon their respective fair values at the date of acquisition. FolioDymanix’s results are included in our consolidated financial statements beginning on November 1, 2014. The results of FolioDynamix between November 1, 2014 and November 3, 2014 were deemed insignificant.

FolioDynamix offers wealth management service providers and financial advisors a comprehensive, secure, cloud-based wealth management technology platform and advisory solutions for managing the full wealth management lifecycle across all types of investment programs. FolioDynamix provides its customers with leading-edge technology to attract and retain the best advisors, enable more effective business process management, accelerate client acquisition and gain visibility across all assets under management (AUM).

FolioDynamix’s customers, which include a variety of financial services organizations, such as brokerage firms, banks (trust and retail), large registered investment advisors (RIAs) and RIA networks and other fee-based managed account providers, access specified bundles of platform applications through the cloud on a periodic (usually multi-year) subscription basis; FolioDynamix sells the periodic subscriptions directly to its customers through its internal sales team.

FolioDynamix’s five largest customers in terms of revenue generation represented more than half of its revenue in 2014. Although a loss of one or more of these customers (most of which have been signed to long-term contracts through at least 2017) would have a negative impact on FolioDynamix’s financial results and condition, FolioDynamix does not have any customer the loss of which would have a materially adverse financial impact on our vertical cloud businesses as a whole.

The following table summarizes the preliminary allocation of the consideration paid for FolioDynamix and the estimated fair value of the assets acquired and liabilities assumed.

		(in thousands)
Consideration:
Cash consideration (including $0.7 million of working capital adjustment paid in 2015)		$ 201,699
Fair value of stock options of FolioDynamix		4,125
		$ 205,824

Recognized amounts of identifiable assets acquired and liabilities assumed:
Financial assets		$ 9,324
Property, plant and equipment		1,581
Customer lists (10 year life)		23,300
Trademarks, trade names and domain names (5 year life)		8,100
Technology (8 year life)		15,200
Financial liabilities		(13,640)
Contingent consideration		(1,870)
Deferred tax liability		(1,585)
Total identifiable net assets		$ 40,410

Goodwill		165,414
		$ 205,824

As a result of this transaction, we recognized $1.6 million of goodwill which is not deductible for tax purposes. We do not expect any significant synergies between FolioDynamix and our other consolidated business however we will continue to evaluate areas capable of centralized activities, such as finance and legal functions. We incurred $1.4 million in transaction costs associated with the FolioDynamix acquisition that were recorded as general and administrative expense during 2014. The fair value adjustment to the historical deferred revenue reduced deferred revenue by approximately $6.0 million. FolioDynamix contributed $3.8 million of revenue and $1.1 million of net income to our 2014 results. See Subsection, “Pro forma information” of this Note 4 for further pro forma information on revenue, net income (loss) and net income (loss) per share.

Other Acquisitions

On August 8, 2014, MSDSonline acquired KMI for $10.3 million in cash, including working capital adjustments, and up to an additional $2.0 million earnout for certain performance measures. The fair value of the earnout was determined using a monte carlo simulation that resulted in a value of approximately $1.2 million at the acquisition date. MSDSonline has allocated the purchase price to the acquired tangible and identifiable intangible assets and liabilities based upon their respective fair values at the date of acquisition.

On August 9, 2013, Bolt acquired Superior Access for $8.7 million in cash. Bolt has estimated the allocation of purchase price to the acquired tangible and identifiable intangible assets and liabilities based upon their respective estimated fair values at the date of acquisition.

On October 1, 2014, Bolt acquired certain assets of Ludwig for $2.1 million in cash. The acquisition was accounted for under the acquisition method. Bolt allocated the purchase price provisionally to the acquired tangible and identifiable intangible assets and liabilities based upon their respective fair values as of the date of acquisition. Bolt expects to complete its purchase price allocation of Ludwig in the first quarter of 2015.

On December 17, 2014, GovDelivery acquired NuCivic for $5.4 million of value, consisting of $2.0 million in cash payments (including $0.6 million of deferred payment) and $3.4 million of GovDelivery equity value which represents approximately 2.5% of the Company. The acquisition was accounted for under the acquisition method. GovDelivery has allocated the purchase price provisionally to the acquired tangible and identifiable intangible assets and liabilities based upon their respective fair values as of the date of acquisition. GovDelivery expects to complete its purchase price allocation of NuCivic in the first quarter of 2015.

On March 30, 2012, Actua acquired 96% of the equity of MSDSonline. The acquisition was accounted for under the acquisition method. Actua located the purchase price to the acquired tangible and identifiable intangible assets and liabilities based upon their respective fair values as of the date of acquisition.

On December 27, 2012, Actua acquired additional equity ownership interests in Bolt (then an equity method business) for consideration of $13.2 million, increasing Actua’s ownership interest in that business from 38% to 53%. Actua consolidated the financial position of Bolt as of the date the additional equity interests were acquired and accounted for the transaction as a business combination. Actua allocated the value of Bolt to its tangible and identifiable intangible assets and liabilities based upon their respective estimated fair values as of the date of acquisition. Additionally, Actua recorded a gain on the transaction of $25.5 million, representing the excess of Actua’s portion of the enterprise value of Bolt over its carrying value for its prior equity interest in Bolt as an equity method company. That gain is included in the line item “Other income (loss), net” in Actua’s Consolidated Statements of Operations for the year ended December 31, 2012. The primary valuation technique used to measure the acquisition date fair value of Bolt immediately before the business combination was the backsolve option-pricing method.

No other acquisitions occurred in 2014 or 2013 that were significant to Actua’s consolidated results.

The following table summarizes the preliminary allocation of the consideration paid for the 2014 and 2013 acquisitions and the estimated fair value of the assets acquired and liabilities assumed (in thousands):

Net assets acquired:	NuCivic		Ludwig		KMI		Superior Access
Goodwill	$	1,257	$	314	$	6,735	$	2,540
Customer lists (5-11 year life)		202		2,658		2,900		4,000
Trademarks, trade names and domain names (5-11 year life)		330		-		300		1,100
Technology (5 year life)		-		-		400		1,300
Non-compete agreement (5 year life)		14		164		-		-
Other net assets (liabilities)		197		-		1,165		(343	)
	$	2,000	$	3,136	$	11,500	$	8,597

Redeemable Noncontrolling Interest

Certain GovDelivery stockholders have the ability to require GovDelivery to redeem their shares in 2014 based on a fair value determination. Because that redemption is outside the control of GovDelivery, Actua has classified this noncontrolling interest outside of equity and will accrete to its estimated redemption value with an offset to additional paid-in capital. This noncontrolling interest is classified as “Redeemable noncontrolling interest” on Actua’s Consolidated Balance Sheets

Certain MSDSonline stockholders have the ability to require MSDSonline to redeem their shares beginning in 2015 and 2016 based on a fair value determination. Because that redemption is outside the control of MSDSonline, Actua has classified this noncontrolling interest outside of equity and will accrete to its estimated redemption value with an offset to additional paid-in capital. This noncontrolling interest is classified as “Redeemable noncontrolling interest” on Actua’s Consolidated Balance Sheets.

The following reconciles the activity related to the redeemable noncontrolling interest during the years ended December 31, 2014, 2013 and 2012 (in thousands):

Balance at December 31, 2011	$	1,378
Redeemable noncontrolling interest portion of subsidiary net loss		(149	)
Accretion to estimated redemption value		839
Acquisition of MSDSonline		1,309
Impact of subsidiary equity transactions		6
Balance at December 31, 2012	$	3,383
Redeemable noncontrolling interest portion of subsidiary net loss		(105	)
Accretion to estimated redemption value		1,088
Impact of subsidiary equity transactions		(924	)
Balance at December 31, 2013	$	3,442
Redeemable noncontrolling interest portion of subsidiary net income		72
Accretion to estimated redemption value		3,095
Impact of subsidiary equity transactions		(388	)
Balance at December 31, 2014	$	6,221

Other Consolidated Businesses Transactions

From time to time, Actua acquires additional equity ownership interests in its consolidated businesses. Purchasing equity ownership interests from a consolidated business’s existing shareholders results in an increase in Actua’s controlling interest in that business and a corresponding decrease in the noncontrolling interest ownership. Those transactions are accounted for as a decrease to “Noncontrolling Interest” and a decrease to “Additional paid-in capital” on Actua’s Consolidated Balance Sheets for the relevant period. During the year ended December 31, 2013, Actua paid $11.0 million and $3.0 million to the noncontrolling interest holders of Bolt and GovDelivery, respectively, to purchase equity interests in those companies. Actua may also acquire additional equity ownership interests in its consolidated businesses as a result of share issuances by those companies or may be diluted by such share issuances. An issuance of equity securities by a consolidated business that results in a decrease in Actua’s equity ownership interests is accounted for in accordance with the policy for “Principles of Accounting for Ownership Interests” described in Note 2, “Significant Accounting Policies.” Other changes to Actua’s equity ownership interests in its consolidated businesses, as well as equity-based compensation award activity at those businesses, also result in adjustments to “Additional paid-in capital” and “Noncontrolling Interest” on Actua’s Consolidated Balance Sheets. The impact of any equity-related transactions at Actua’s consolidated businesses is included in the line item “Impact of subsidiary equity transactions” on Actua’s Consolidated Statements of Changes in Equity. The impact of these changes to the noncontrolling interest are also included in the line item “Impact of subsidiary equity transactions” on Actua’s Consolidated Statements of Changes in Equity for the years ended 2014, 2013 and 2012. These amounts primarily relate to Actua’s acquisition of additional equity ownership interests in our consolidated businesses from noncontrolling interests, as well as the impact of Actua’s consolidation of Bolt and CIML in 2012 on the noncontrolling interest.

Pro Forma Information (Unaudited)

The information in the following table represents revenue, net income (loss) attributable to Actua and net income (loss) per diluted share attributable to Actua for the relative periods, had Actua consolidated FolioDynamix, NuCivic, KMI, Ludwig and Superior Access in each of those periods (in thousands, except per share data).

	Year Ended December 31,
	2014			2013
Revenue	$	119,071		$	90,561
Net income (loss) from continuing operations attributable to Actua Corporation	$	(41,295	)	$	(35,439	)
Net income (loss) from continuing operations per basic and diluted share attributable to Actua Corporation	$	(1.11	)	$	(0.97	)

Included in the pro forma amount above, are amounts associated with our significant acquisition, FolioDynamix, which contributed $30.0 million of revenue and $1.5 million of net income and $0.04 of net income (loss) per share to our 2014 results. FolioDynamix, contributed $19.8 million of revenue and $(3.2) million of net income (loss) and $(0.90) of net income (loss) per share to our 2013 results. See Subsection, “Pro forma information” of this Note 4 for further pro forma information on revenue, net income (loss) and net income (loss) per share.

The information in the following table represents revenue, net income (loss) attributable to Actua and net income (loss) per diluted share attributable to Actua for the relative periods, had Actua consolidated MSDSonline and Bolt (including Bolt’s acquisition of Superior Access) in each of those periods (in thousands, except per share data).

	Year Ended December 31,
	2013	2012
Revenue	$ 65,995	$ 47,265
Net income (loss) from continuing operations attributable to Actua Corporation	$ (25,591)	$ 10,134
Net income (loss) from continuing operations per basic and diluted share attributable to Actua Corporation	$ (0.70)	$ 0.28

Separate Financial Statements of Subsidiary not Consolidated

The following is summarized financial information for Bolt (then Seapass Solutions, Inc.), which was consolidated by Actua as of December 27, 2012, for the year ended December 31, 2012. Prior to such consolidation, Actua held a 38% equity ownership interest in the business for the year ended December 31, 2012, respectively, and accounted for this ownership interest under the equity method of accounting. The following summarized information is based upon that businesses financial statements, which have been prepared in conformity with GAAP and require estimates and assumptions that affect the amounts reported. Actual results could materially differ from those estimates.

		December 31, 2012
		(in thousands)
Total Assets		$ 11,705
Total Liabilities		$ 16,759
Total Stockholders' Equity		$ (5,054)

		December 31, 2012
		(in thousands)
Revenue		$ 6,518
Expenses		$ (18,245)
Net loss		$ (11,727)