Business Combination

12 Months Ended

Dec. 31, 2019

On December 7, 2018, the Company acquired the assets and assumed the liabilities of DealerScience for $27.9 million in cash and contingent cash consideration of up to $5.0 million based on achievement of future revenues. The acquisition of DealerScience allows the Company to more quickly expand into the digital retailing space in efforts to build out its end-to-end user experience. At the date of the acquisition, the Company assessed the probabilities of DealerScience meeting future revenues and recorded contingent consideration of $4.5 million. From the acquisition date through December 31, 2019, there were no significant changes to the value of the contingent consideration, which was recorded within accrued expenses and other current liabilities and other long-term liabilities as of December 31, 2019, and within other long-term liabilities as of December 31, 2018.

The Company recorded goodwill of $20.0 million, which represents the excess of the purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed. The goodwill is attributable to the workforce of the acquired business and the significant synergies expected to arise from the Company’s acquisition of DealerScience. Goodwill attributed to the acquisition is deductible for income tax purposes.

The following table summarizes the allocation of the purchase consideration and the estimated fair value of the assets acquired and the liabilities assumed for the acquisition of DealerScience during the year ended December 31, 2018 (in thousands):



	DealerScience
Assets acquired
Cash	$	1,037
Accounts receivable	240
Prepaid expenses	29
Acquired technology	9,900
Customer relationships	1,500
Goodwill	20,041
Total assets acquired	$	32,747
Liabilities assumed	342
Net assets acquired	$	32,405
Consideration paid
Cash paid	$	27,928
Contingent consideration	4,477
Total consideration	$	32,405

The weighted average useful life of all identified acquired intangible assets is 5 years. The estimated useful lives for acquired technology and customer relationships are 6 years and 2 years, respectively.

For the year ended December 31, 2018, the Company incurred transaction costs of $0.4 million in connection with the DealerScience acquisition which were expensed as incurred and included in general and administrative expense in the accompanying consolidated statements of comprehensive loss.

The Company’s consolidated financial statements include the operating results of DealerScience for the year ended December 31, 2019 and from the date of acquisition of December 7, 2018 through December 31, 2018. Separate operating results and pro forma results of operations for DealerScience have not been presented as the effect of the acquisition is not material to the Company’s financial results.