Business Combination

12 Months Ended

Dec. 31, 2023

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 a contingent consideration liability of $6.3 million. At December 31, 2023 and 2022 the contingent consideration liability was remeasured to $5.6 million and $6.7 million, with $3.6 million and $4.7 million recorded in “Other liabilities” and $2.0 million and $2.0 million recorded in “Accrued expenses and other current liabilities” within the consolidated balance sheets, respectively.

The Company recorded goodwill of $8.6 million on the Acquisition Date, which represented 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 allocated to the assets acquired and liabilities assumed based on their fair value as of the Acquisition Date. As a result of the Company’s impairment assessment in September 2022, goodwill was subsequently written down to zero (refer to Note 7).

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 Digital Motors as of the Acquisition Date (in thousands).


	Digital Motors
Assets acquired
Cash	$	5,201
Acquired technology	12,500
Other assets acquired	548
Goodwill	8,570
Total assets acquired	$	26,819
Liabilities assumed
Accounts payable	$	1,244
Accrued employee expenses	984
Deferred tax liabilities	2,298
Other liabilities assumed	507
Total liabilities assumed	$	5,033
Net assets acquired	21,786
Consideration paid
Cash paid	$	15,484
Contingent consideration	6,302
Total consideration	$	21,786

The finalized purchase price allocation is reflected in the consolidated balance sheet as of December 31, 2022.

The estimated useful life for acquired technology was 4 years at the time of acquisition, but a change in estimate during the third quarter of 2023 resulted in revision of the useful life to 3 years. Total liabilities assumed include $1.8 million of accrued Digital Motors transaction expenses, which were paid by the Company shortly after the Acquisition Date and included in cash paid for acquisition, net of cash acquired on the accompanying consolidated statements of cash flows.

The Company incurred transaction costs of $1.0 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 December 31, 2023. 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.