Business Combinations, Goodwill and Intangible Assets

a) Liss Systems Limited

On July 1, 2016, the Company entered into a share purchase agreement (the “Liss Agreement”) for the purchase of Liss.

Pursuant to the Liss Agreement, the Company purchased all of the issued and outstanding shares of Liss from the Liss shareholders for a cash consideration of $5,111. A portion of the purchase consideration otherwise payable was placed into escrow as security for the post-closing working capital adjustments and the indemnification obligations under the Liss Agreement.

The Company also issued 33,459 shares of restricted common stock with an aggregate fair value of $1,754 to certain key employees of Liss, each of whom accepted employment positions with the Company upon consummation of the combination. The restricted common stock vest proportionally over four years and the fair value of these grants will be recognized as compensation expense on a straight-line basis over the vesting term.

Liss is a provider of policy administration solutions for the life insurance and pensions industry. Liss’s flagship "LISSIA" platform includes multi-channel interfaces, underwriting, workflow engines, and document production modules to automate new policy issuance and simplify policy administration. Liss’s technology platform combined with EXL platforms’ such as LifePRO^® will automate key customer processes from new business to policy administration with very little human interactions. Accordingly, the Company paid a premium for the acquisition which is being reflected in the goodwill recognized from the purchase price allocation.

During the three months ended December 31, 2016, the Company finalized its purchase price allocation for the acquisition based on their fair values as set forth below:



	Amount
Tangible assets	$	517
Tangible liabilities	(993		)
Deferred tax liability	(643		)
Identifiable intangible assets:
Customer relationships	1,918
Developed technology	1,571
Trade names and trademarks	231
Goodwill	2,510
Total purchase price	$	5,111

The amount of goodwill recognized from the Liss acquisition is not deductible for tax purposes.

The intangibles such as customer relationships, developed technology and trade names and trademarks from the Liss acquisition are being amortized over a useful life of five, ten and three years, respectively.

b) IQR Consulting Inc.

On September 1, 2016, the Company entered into a share purchase agreement (the “IQR Agreement”) for the purchase of IQR.

Pursuant to the IQR Agreement, the Company purchased all of the issued and outstanding shares of IQR from the IQR shareholders for an aggregate consideration of $5,092. A portion of the purchase consideration otherwise payable was placed into escrow as security for post-closing working capital adjustments and the indemnification obligations under the IQR Agreement.

The Company also issued 21,987 restricted stock units with an aggregate fair value of $1,125 to certain key employees of IQR, each of whom accepted employment positions with the Company upon consummation of the combination. The restricted stock units vest proportionally over four years and the fair value of these grants will be recognized as compensation expense on a straight line basis over the vesting term.

IQR is a provider of marketing and risk analytics services to super-regional banks and credit unions. IQR specializes in data analytics and related consulting services. IQR’s industry focus aligns well with the Company's Analytics strengths and the Company anticipates the acquisition will allow the Company to penetrate into super-regional banks, as well as the underserved credit union market. Accordingly, the Company paid a premium for the acquisition, which is reflected in the goodwill recognized from the purchase price allocation.

During the three months ended December 31, 2016, the Company finalized its purchase price allocation for the acquisition based on their fair values as set forth below:



	Amount
Tangible assets	$	1,449
Tangible liabilities	(420		)
Deferred tax liability	(836		)
Identifiable intangible assets:
Customer relationships	2,300
Goodwill	2,599
Total purchase price	$	5,092

The amount of goodwill recognized from the IQR acquisition is not deductible for tax purposes.

The customer relationships from the IQR acquisition are being amortized over the average useful life of eight years.

c) Datasource Consulting, LLC.

On October 22, 2016, the Company entered into a membership interests purchase agreement (the “Datasource Agreement”) for the purchase of Datasource.

Pursuant to the Datasource Agreement, the Company purchased all of the membership interest of Datasource from its members for an aggregate consideration of $20,318. A portion of the purchase consideration otherwise payable was placed into escrow as security for the post-closing working capital adjustments and the indemnification obligations under the Datasource Agreement.

The Company also issued 93,604 shares of restricted common stock with an aggregate fair value of $4,483 to certain key employees of Datasource, each of whom accepted employment positions with the Company upon consummation of the combination. The restricted common stock vest proportionally over four years and the fair value of these grants will be recognized as compensation expense on a straight line basis over the vesting term.

Datasource is specialized in Enterprise Data Management and Business Intelligence. Datasource helps clients design data management strategies, implement data infrastructure and manage data assets. This acquisition expands the Company's addressable market within analytics and allows it to compete in the large and growing enterprise data management and business intelligence markets. Accordingly, the Company paid a premium for the acquisition, which is reflected in the goodwill recognized from the purchase price allocation.

The Company has preliminarily allocated the purchase price to the net tangible and intangible assets based on their fair values as set forth below:



	Amount
Tangible assets	$	3,582
Tangible liabilities	(1,503		)
Identifiable intangible assets:
Customer relationships	6,340
Developed technology	520
Trade names and trademarks	380
Goodwill	10,999
Total purchase price	$	20,318

The amount of goodwill recognized from the Datasource acquisition is deductible for tax purposes.

The customer relationships from the Datasource acquisition are being amortized over the weighted average useful life of 6 years, and developed technology and trademarks are being amortized over the useful life of 5 years and 3 years, respectively.

Under ASC topic 805, “Business Combinations,” the preliminary allocation of the purchase price to the tangible and intangible assets and liabilities acquired may change for a period of up to one year from the date of the acquisition. The Company’s purchase accounting for Datasource as of December 31, 2016 was incomplete and the Company expects to complete the working capital adjustment and valuation of the tangible assets, intangible assets and liabilities assumed as of the acquisition date during the first quarter of 2017. Accordingly, the Company may adjust the amounts recorded as of December 31, 2016 to reflect the final valuations of the assets acquired or liabilities assumed.

During the year ended December 31, 2016, the Company recognized $633 as acquisition related costs for its Liss, IQR and Datasource acquisitions. Such amounts are included in general and administrative expenses in the consolidated statements of income. The Company’s results of operations for the year ended December 31, 2016 includes revenues of $6,855 from its Liss, IQR and Datasource acquisitions from the date on which these acquisitions were consummated through December 31, 2016. It is not practicable to disclose the net earnings since management does not allocate or evaluate operating expenses and income taxes at that level.

Goodwill

The following table sets forth details of the Company’s goodwill balance as of December 31, 2016:



	Insurance			Healthcare		TT&L			F&A			Analytics		All Other		Total
Balance as at January 1, 2015	$	35,824		$	19,276	$	13,833		$	48,555		$	16,785	$	5,326	$	139,599
Acquisitions	—			—		—			—			33,155		—		33,155
Currency translation adjustments	—			—		(555		)	(664		)	—		—		(1,219		)
Balance as at December 31, 2015	$	35,824		$	19,276	$	13,278		$	47,891		$	49,940	$	5,326	$	171,535
Acquisitions	2,510			—		—			—			13,598		—		16,108
Currency translation adjustments	(224		)	—		(295		)	(354		)	—		—		(873		)
Balance as at December 31, 2016	$	38,110		$	19,276	$	12,983		$	47,537		$	63,538	$	5,326	$	186,770

Based on the results of the impairment testing performed during the year ended December 31, 2016, the Company’s goodwill was not impaired. The Company makes every reasonable effort to ensure that it accurately estimates the fair value of the reporting units. However, future changes in the assumptions used to make these estimates could result in an impairment loss.

Intangible Assets

Information regarding the Company’s intangible assets is set forth below:



	As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	75,181	$	(32,968	)	$	42,213
Leasehold benefits	2,715		(2,247		)	468
Developed technology	14,186		(6,468		)	7,718
Non-compete agreements	2,045		(1,612		)	433
Trade names and trademarks	5,360		(3,322		)	2,038
	$	99,487	$	(46,617	)	$	52,870
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	100,387	$	(46,617	)	$	53,770



	As of December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	64,816	$	(24,215	)	$	40,601
Leasehold benefits	2,789		(2,109		)	680
Developed technology	12,234		(4,363		)	7,871
Non-compete agreements	2,045		(1,451		)	594
Trade names and trademarks	4,770		(2,683		)	2,087
	$	86,654	$	(34,821	)	$	51,833
Indefinite-lived intangible assets:
Trade names and trademarks	$	900	$	—		$	900
Total intangible assets	$	87,554	$	(34,821	)	$	52,733

Amortization expense for the years ended December 31, 2016, 2015 and 2014 was $11,873, $10,226 and $6,623, respectively. The remaining weighted average life of intangible assets was 5.8 years for customer relationships, 2.4 years for leasehold benefits, 4.9 years for developed technology, 2.5 years for non-compete agreements and 5.3 years for trade names and trademarks.



Estimated amortization of intangible assets during the year ending December 31:
2017	$	13,910
2018	12,156
2019	11,257
2020	4,111
2021 and thereafter	11,436
Total	$	52,870