Business Combination

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

On May 31, 2022 (the “Acquisition Date”), the Company acquired all of the outstanding shares of Digital Motors for $15.5 million in cash and up to $8.0 million of contingent cash consideration based on the occurrence of certain events including the achievement of product development milestones and future revenues. The acquisition of Digital Motors is intended to accelerate TrueCar's plan to deliver a robust digital car buying and selling experience with its TrueCar+ marketplace. At the Acquisition Date, the Company assessed the probabilities of Digital Motors meeting product development milestones and future revenue targets and recorded contingent consideration of $6.3 million, with $4.4 million recorded in Other liabilities and $1.9 million recorded in Accrued expenses and other current liabilities. From the Acquisition Date through June 30, 2022, there were no significant changes to the value of the contingent consideration.

The Company recorded goodwill of $8.6 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 Digital Motors. Goodwill attributed to the acquisition is not deductible for income tax purposes. The purchase consideration was preliminarily allocated to the assets acquired and liabilities assumed based on their fair value as of the Acquisition Date.

The following table summarizes the preliminary allocation of the purchase consideration and the estimated fair value of the assets acquired and the liabilities assumed for the acquisition of Digital Motors as of the Acquisition Date (in thousands). The purchase price allocation is preliminary and is subject to revision as additional information about the fair value of the assets acquired and liabilities assumed become available, including deferred taxes and residual goodwill.


	Digital Motors
Assets acquired
Cash	5,201
Acquired technology	12,500
Other assets acquired	328
Goodwill	8,570
Total assets acquired	$	26,599
Liabilities assumed
Accounts payable	1,102
Accrued employee expenses	984
Deferred tax liabilities	2,556
Other liabilities assumed	171
Total liabilities assumed	4,813
Net assets acquired	21,786
Consideration paid
Cash paid	$	15,484
Contingent consideration	$	6,302
Total consideration	$	21,786

The estimated useful life for acquired technology is 4 years. Total liabilities assumed include $1.8 million of accrued Digital Motors transaction expenses, which were paid by the Company as of June 30, 2022 and included in cash paid for acquisition, net of cash acquired on the accompanying condensed consolidated statements of cash flows.

For the six months ended June 30, 2022, the Company incurred transaction costs of $0.9 million in connection with the Digital Motors 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 Digital Motors from the Acquisition Date through June 30, 2022. Separate operating results and pro forma results of operations for Digital Motors have not been presented as the effect of the acquisition is not material to the Company’s financial results.