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 that occurred in the first quarter of 2015) in cash and $4.1 million of equity value related to rolled stock options. The $4.1 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 (as 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.

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		(14,397	)
Contingent consideration		(1,870	)
Deferred tax liability		(1,585	)
Total identifiable net assets		39,653

Goodwill		166,171
	$	205,824

As a result of this transaction, Actua recognized $166.2 million of goodwill, which is not deductible for tax purposes. No specific synergies exist between FolioDynamix and Actua’s other businesses; however, Actua personnel perform various tasks for FolioDynamix, such as certain marketing, legal and finance functions, that, at times, generate cost savings at the company. Actua 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 Actua’s 2014 consolidated 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 Knowledge Management Innovations, LTD (“KMI”) for $11.5 million, subject to working capital adjustments, including a contingent earn-out payment of up to $2.0 million tied to certain performance measures that may become due in 2016. MSDSonline has estimated the allocation of the purchase price to the acquired tangible and identifiable intangible assets and liabilities based upon their provisional respective fair values at the date of acquisition.

On October 1, 2014, Bolt acquired certain assets of Ludwig-Walpole Company Inc. (“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 will complete its purchase price allocation of Ludwig by September 30, 2015.

On December 17, 2014, GovDelivery acquired NuCivic for $5.1 million of consideration, consisting of $2.0 million in cash payments (including a $0.6 million deferred payment) and $3.1 million of GovDelivery stock. The acquisition was accounted for under the acquisition method. GovDelivery has allocated 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.

The allocations of the KMI, Ludwig and NuCivic purchase prices to identified intangible assets and tangible assets and liabilities are as follows (in thousands):

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

Redeemable Noncontrolling Interest

Certain GovDelivery stockholders have the ability to require GovDelivery to redeem their shares in 2016 based on a fair value determination. Additionally, certain MSDSonline stockholders have the ability to require MSDSonline to redeem their shares in 2016 and 2017 based on a fair value determination. Because those redemptions are outside the control of the respective businesses, 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” in Actua’s Consolidated Balance Sheets.

The following is a reconciliation of the activity related to Actua’s redeemable noncontrolling interest during the three months ended March 31, 2015 and 2014 (in thousands):

Balance at December 31, 2013	$	3,442
Redeemable noncontrolling interest portion of subsidiary net income/(loss)		11
Accretion to estimated redemption value		594
Impact of subsidiary equity transactions		7
Balance at March 31, 2014	$	4,054

Balance at December 31, 2014	$	6,221
Redeemable noncontrolling interest portion of subsidiary net income/(loss)		(68	)
Accretion to estimated redemption value		1,303
Equity transfer among owners		(3,339	)
Impact of subsidiary equity transactions		(631	)
Balance at March 31, 2015	$	3,486

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’ 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 decreases to “Noncontrolling interests” and decreases to “Additional paid-in capital” in Actua’s Consolidated Balance Sheets for the relevant periods. Actua may also acquire additional equity ownership interests in its consolidated businesses, either from existing holders or as a result of share issuances by one or more of those businesses, and Actua’s equity ownership interests may be diluted by any such share issuances to other parties. 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 interests” in 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” in 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” in Actua’s Consolidated Statements of Changes in Equity for the relevant period. These amounts primarily relate to Actua’s acquisition of additional equity ownership interests in our consolidated businesses from noncontrolling interests.

Pro Forma Information

The information in the following table represents the revenue, net income (loss) from continuing operations attributable to Actua Corporation and the net income (loss) from continuing operations per diluted share attributable to Actua Corporation for the three-month period ended March 31, 2014, had Actua owned FolioDynamix, Bolt owned Ludwig, GovDelivery owned NuCivic and MSDSonline owned KMI during that entire period. The information for the three-month period ended March 31, 2015 is shown for comparative purposes only.

	Three Months Ended March 31,
	2015			2014
	(in thousands, except per share data)

Revenue	$	30.6		$	26.6
Net income (loss) from continuing operations attributable to Actua Corporation	$	(14.8	)	$	(11.8	)
Net income (loss) from continuing operations per diluted share attributable to Actua Corporation	$	(0.40	)	$	(0.32	)