Business Combinations

12 Months Ended

Apr. 30, 2015

Business Combinations [Abstract]

Business Combinations

6. Business Combinations

Fiscal Year 2014

FeedMagnet

On April 15, 2014, the Company acquired FeedMagnet Inc. (“FeedMagnet”), a privately-owned social media curation company, for $9.3 million in cash. The Company accounted for the FeedMagnet acquisition using the acquisition method of accounting.

The Company allocated the purchase price to the assets acquired, including intangible assets, and liabilities assumed based on estimated fair values at the date of the acquisition. The Company estimated the value of tangible assets and liabilities based on purchase price and future intended use. The Company derived the value of intangible assets from the present value of estimated future benefits from the various intangible assets acquired.

The Company allocated the purchase price for FeedMagnet as follows (in thousands):

Cash and cash equivalents	$	383
Accounts receivable		695
Prepaid expenses and other current assets		19
Intangible assets:
Developed technology (3 year useful life)		3,265
Customer relationships (3 to 10 year useful life)		535
Total identified intangibles		3,800
Goodwill		6,324
Total assets acquired	$	11,221
Accounts payable		(80	)
Accrued expenses and other current liabilities		(187	)
Deferred revenue		(234	)
Deferred tax liability		(1,391	)
Total liabilities assumed	$	(1,892	)
Net assets acquired	$	9,329

The consideration paid was as follows (in thousands):

Cash	$	9,329
Total consideration	$	9,329

Goodwill represents the excess of the purchase price over the aggregate fair value of the net identifiable assets acquired and is not deductible for tax purposes. Goodwill for FeedMagnet resulted primarily from the Company’s expectations that FeedMagnet’s solutions will enhance the Company’s product offerings. The Company integrated the FeedMagnet business into the Company’s operations; therefore, there are no separate revenue and earnings for FeedMagnet since the integration.

Fiscal Year 2013

PowerReviews

On June 12, 2012, the Company acquired PowerReviews, a provider of social commerce solutions, for a total cash and stock purchase price of $150.8 million.

On January 8, 2014, the Court ruled that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18. On April 24, 2014, the Company entered into a Joint Stipulation with the DOJ to resolve the DOJ’s claims in the antitrust action and, together with the DOJ, the Company submitted a proposed order to the Court. Under the terms of the Joint Stipulation and the proposed order, the Company was required to divest all of the net assets of the PowerReviews business. On June 4, 2014, the Company entered into a definitive agreement to divest the assets of PowerReviews, pursuant to a Joint Stipulation with the Court for $30.0 million in cash, $4.5 million of which remains in escrow as a partial security for the Company’s indemnification obligations under the definitive agreement and is set to expire in July 2015 (See Note 15). As a result, PowerReviews revenues, related expenses and loss on disposal, net of tax, are components of “loss from discontinued operations, net of tax” in the consolidated statements of operations. See Note 3 for further discussion of our discontinued operations.

Longboard Media, Inc.

On November 5, 2012, the Company acquired Longboard Media, Inc. (“Longboard Media”), a full service media management network for retailers, shopping publishers and advertisers for approximately $26.9 million in cash, 0.5 million shares of the Company’s common stock and future contingent consideration with an acquisition date fair value of $4.3 million. The contingent consideration was payable to Longboard Media’s achievement of certain performance goals for the period from January 1, 2013 to December 31, 2013. The estimated fair value of contingent consideration was determined using a weighted average probability of various outcomes of achieving the performance goals. Changes in the fair value of this contingent consideration were recorded in the statement of operations through December 31, 2013. At the date of acquisition, the Company estimated that an additional contingent consideration of approximately $2.0 million would be paid to certain identified key individuals conditional upon being employed with the Company through December 31, 2013.

As of April 30, 2013, the fair value of the contingent consideration included in the purchase consideration, which is recorded in accrued expenses and other current liabilities, was $3.3 million. On October 31, 2013, the Company determined that the probability of attaining the underlying performance goals had become remote; and, as a result, the fair value of the contingent consideration included in the purchase price and the resultant payout was estimated to be zero. On January 31, 2014, the Company concluded that the underlying performance goals were not met and the payout was zero. The decrease in fair value of $3.3 million was recorded as a benefit to general and administrative expense for the fiscal year ended April 30, 2014.

At April 30, 2013, the additional contingent consideration payable to the identified key individuals conditional upon being employed with the Company, was estimated to be $1.5 million and was being recorded over the period for which services were provided. As of October 31, 2013, the estimated payout was determined to be zero, so this additional contingent consideration was also reduced to zero. On January 31, 2014, the Company concluded that the payout was zero. As a result, $1.0 million was recorded as a benefit to general and administration expense and sales and marketing expense for the fiscal year ended April 30, 2014.

The Company did not have any liabilities related to contingent consideration as of April 30, 2015 or April 30, 2014.