ACQUISITIONS

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

PolSource — On April 2, 2021, the Company acquired 100% of PolSource S.A. and its subsidiaries, a Salesforce Platinum Consulting Partner with more than 350 experienced Salesforce specialists for a purchase price of $148.2 million including contingent consideration with an acquisition-date fair value of $35.4 million. At the time of the acquisition, the Company committed to paying up to $45.0 million in contingent consideration, subject to attainment of certain revenue, earnings and operational targets.

CORE — On July 23, 2021, the Company acquired 100% of CORE SE and its subsidiaries (CORE), a professional service provider specializing in IT strategy and technology-driven transformations with office locations in Europe and the Middle East for a purchase price of $50.2 million including contingent consideration with an acquisition-date fair value of $4.0 million and deferred consideration of $7.8 million. The Company could pay up to $8.1 million in contingent consideration and the actual future payout is subject to attainment of certain revenue, earnings and operational targets.

Emakina — On November 3, 2021, the Company completed the acquisition of 98.69% of Emakina Group SA and its subsidiaries (“Emakina”), a group of independent digital agencies, for a purchase price of $143.4 million in cash. On November 30, 2021, the Company completed the acquisition of the remaining 1.31% of Emakina Group SA’s outstanding shares for a purchase price of $1.7 million in cash.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of each respective acquisition and updated for any changes as of March 31, 2022:


	PolSource		CORE		Emakina
Cash and cash equivalents	$	2,565	$	11,283	$	5,142
Trade receivables and contract assets	12,734		10,266		34,389
Prepaid and other current assets	814		5,523		3,109
Goodwill	125,265		23,354		137,037
Intangible assets	15,790		8,368		30,488
Property and equipment and other noncurrent assets	461		4,585		17,024
Total assets acquired	$	157,629	$	63,379	$	227,189
Accounts payable, accrued expenses and other current liabilities	$	5,337	$	8,589	$	36,411
Short-term debt	—		—		13,657
Long-term debt	—		—		8,874
Operating lease liabilities, noncurrent	157		2,056		5,397
Other noncurrent liabilities	3,963		2,525		8,363
Total liabilities assumed	$	9,457	$	13,170	$	72,702
Noncontrolling interest in consolidated subsidiaries	—		—		10,469
Net assets acquired	$	148,172	$	50,209	$	144,018

As of March 31, 2022 the Company has substantially completed the purchase price allocation for the acquisition of PolSource and the estimated fair values of the assets acquired and liabilities assumed have been finalized with the exception of the accounting for income taxes. The effect of adjustments recorded during the three months ended March 31, 2022 that would have been recognized in a prior period if the adjustment to the preliminary amounts had been recognized as of the acquisition date of PolSource was not material. The Company expects to complete the purchase price allocations as soon as practicable but no later than one year from the acquisition date.

The effect of adjustments recorded during the three months ended March 31, 2022 that would have been recognized in a prior period if the adjustment to the preliminary amounts had been recognized as of the acquisition date of CORE was not material. For the acquisition of CORE, the estimated fair values of the assets acquired and liabilities assumed are provisional and based on the information that was available as of the acquisition date. The Company expects to complete the purchase price allocations as soon as practicable but no later than one year from the acquisition date.

During the three months ended March 31, 2022, the Company adjusted working capital accounts of Emakina resulting in a corresponding increase in the value of acquired goodwill of $0.4 million. For the acquisition of Emakina, the estimated fair values of the assets acquired, liabilities assumed and noncontrolling interest are provisional and based on the information that was available as of the acquisition date. The Company expects to complete the purchase price allocations as soon as practicable but no later than one year from the acquisition date. The effect of adjustments recorded during the three months ended March 31, 2022 that would have been recognized in a prior period if the adjustment to the preliminary amounts had been recognized as of the acquisition date of Emakina was not material.

Pro forma results of operations have not been presented because the effect of these acquisitions on the Company’s consolidated financial statements was not material individually or in the aggregate.

As of March 31, 2022, the following table presents the estimated fair values and useful lives of intangible assets acquired from PolSource, CORE and Emakina:


	PolSource			CORE			Emakina
	Weighted Average Useful Life (in years)	Amount		Weighted Average Useful Life (in years)	Amount		Weighted Average Useful Life (in years)	Amount
Customer relationships	6	$	14,790	6	$	7,779	7	$	27,822
Trade names	3	1,000		5	589		3	2,666
Total		$	15,790		$	8,368		$	30,488

The goodwill recognized as a result of the PolSource acquisition is attributable to synergies expected to be achieved by combining the businesses of EPAM and PolSource, expected future contracts, the assembled workforce acquired and other factors. The goodwill recognized as a result of the CORE acquisition is attributable to synergies expected to be achieved by expanding the Company’s ability to support customers as a strategic consultant in Europe and the Middle East, expected future contracts, the assembled workforce acquired and other factors. The goodwill recognized as a result of the Emakina acquisition is attributable to synergies expected to be achieved by enhancing EPAM’s digital experience practice as well as augmenting offerings in digital design and engineering capabilities, expected future contracts, the assembled workforce and other factors.

The goodwill acquired as a result of the PolSource, CORE and Emakina acquisitions is not expected to be deductible for income tax purposes.

Other 2021 Acquisitions — During the year ended December 31, 2021, the Company completed four additional acquisitions with an aggregate purchase price of $65.2 million including contingent consideration with an acquisition-date fair value of $17.6 million. The Company could pay up to $30.2 million in contingent consideration and the actual future payouts are subject to attainment of specified performance targets during the periods ranging from 12 months to 48 months after the respective acquisition dates. These acquisitions increased EPAM’s e-platform offerings and expanded the Company’s geographical reach as well as added $14.1 million in intangible assets, consisting mainly of customer relationships. Pro forma results of operations have not been presented because the effect of these acquisitions on the Company’s consolidated financial statements was not material individually or in the aggregate.

2022 Acquisition — During the three months ended March 31, 2022, the Company completed one acquisition with a purchase price of $10.6 million including contingent consideration with an acquisition-date fair value of $1.8 million. This acquisition expanded EPAM’s capabilities to deliver end-to-end solutions for designing and building sophisticated commerce platforms as well as added $2.3 million of intangible assets, consisting of customer relationships. Pro forma results of operations have not been presented because the effect of this acquisition on the Company’s condensed consolidated financial statements was not material.