Business Combinations

12 Months Ended

Dec. 31, 2021

Business CombinationOn April 1, 2020, we completed the acquisition of privately-held exocad for a total purchase consideration of $430.0 million and exocad became a wholly-owned subsidiary. exocad is a German dental CAD/CAM software company that offers fully integrated workflows to dental labs and dental practices.

The allocation of purchase price to assets acquired and liabilities assumed based on estimated fair values is as follows (in thousands):


Goodwill 1	$	340,181
Identified intangible assets	118,700
Cash and cash equivalents	9,190
Deferred tax liabilities	(35,419)
Other assets (liabilities), net	(2,674)
Total	$	429,978

1 None of this goodwill is deductible for tax purposes.

The following table presents details of the identified intangible assets acquired (in thousands, except years):


	Weighted Average Amortization Period (in years)	Fair Value
Intangible assets subject to amortization:
Existing technology	10	$	87,000
Customer relationships	10	21,500
Tradenames	7	9,800
Intangible assets not subject to amortization:
In-process Research and Development (“IPR&D”)	N/A	400
Total intangible assets		$	118,700

We believe the amount of purchased intangible assets recorded above represent the fair values and approximate the amount a market participant would pay for these intangible assets as of the acquisition date.

Existing technology represents the estimated fair value of exocad’s core technology that has reached technological feasibility. We valued the existing technology using the multi-period excess earnings method under the income approach. The economic useful life of existing technology was determined by considering the life cycle of the technology and related cash flows.

Customer relationships represent the fair value of future projected revenue that will be derived from sales of products to existing customers. Customer relationships were valued using the with-and-without method under the income approach. The economic useful life for customer relationships was based on historical customer attrition rates.

Tradenames relates to the exocad tradenames that are recognized within the industry. The fair value was determined using the relief-from-royalty method under the income approach. The economic useful life of tradenames was determined by benchmarking against similar transactions entered into by peer companies.

IPR&D refers to the fair value of projects that are not yet completed but have potential value to the company.