ACQUISITIONS

9 Months Ended

Sep. 30, 2022

ACQUISITIONS

ACQUISITIONS

3.   ACQUISITIONS

On July 1, 2021, the Company purchased Chi-X, whose wholly-owned subsidiary Chi-X Asia Pacific Holdings Limited was subsequently rebranded to Cboe Asia Pacific. Cboe Asia Pacific is a holding company of alternative market operators and providers of market solutions, which is included in the Company’s Europe and Asia Pacific segment. The acquisition of Chi-X provided the Company with a single point of entry into two key capital markets, Australia and Japan, to help enable it to expand its global equities and market data business into Asia Pacific, bring other products and services to the region, and further expand access to its proprietary product suite in the region. Of the acquisition’s purchase price, $137.0 million was allocated to goodwill, $73.8 million was allocated to intangible assets, $25.7 million was allocated to working capital, and $53.0 million in contingent consideration, which is based on developmental milestones of the acquired business. See below for further discussion of intangible assets acquired.

On May 2, 2022, the Company purchased ErisX, which was subsequently rebranded to Cboe Digital. Cboe Digital operates a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearinghouse. Ownership of Cboe Digital allows the Company to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency. Eris Innovations Holdings, LLC (formerly Eris Exchange Holdings, LLC) was not a part of this transaction and the Company retains its minority equity ownership interest in Eris Innovations Holdings, LLC. Of the acquisition’s purchase price, $460.9 million was allocated to goodwill, $95.0 million was allocated to intangible assets, and $8.4 million was allocated to working capital. Prior to signing the acquisition agreement, the Company held a minority investment in ErisX. As a result of the acquisition of the remaining portion of ErisX, the Company recognized a $7.5 million gain, reflecting the change in fair value of the minority investment in ErisX as a result of the acquisition, which is included in other (expense) income, net in the condensed consolidated statement of income. These amounts represent the preliminary allocation of the purchase price, as the Company continues to evaluate information relevant to its determination of the fair value of the assets and liabilities acquired, and are subject to revision during the remainder of the measurement period, a period not to exceed twelve months from the acquisition date. See below for further discussion of intangible assets acquired. Additionally, the Company performed impairment testing during the nine months ended September 30, 2022, as there were market events that indicated it was more likely than not that these assets were impaired, resulting in the recognition of an impairment charge to goodwill. See Note 8 (“Goodwill, Intangible Assets, net, and Digital Assets Held”) for more information on the impairment.

On June 1, 2022, the Company purchased NEO. NEO is a fintech organization that is comprised of a fully registered Canadian securities exchange with a diverse product and services set ranging from corporate listings to cash equities trading and a non-listed securities distribution platform. With ownership of NEO, the Company expects to further grow Canada as a hub for global equities trading, in addition to MATCHNow, the ATS acquired by the Company in 2020. During the quarter ended September 30, 2022, the Company continued to refine the purchase price accounting, resulting in the updated allocation of the acquisition’s estimated purchase price of $146.9 million allocated to goodwill, $69.1 million allocated to intangible assets, negative net working capital of $7.0 million, and $7.7 million in contingent consideration, which will be earned based on developmental milestones of the acquired business. The refining of the purchase price allocation referenced in the previous sentence resulted in a $14.5 million increase in allocation to goodwill, a $61.0 million decrease in allocation to intangible assets, a $0.1 million increase in allocation to negative net working capital, and a $46.6 million decrease in contingent consideration when compared to the initial purchase price accounting entries recorded during the quarter ended June 30, 2022. These amounts continue to represent a preliminary allocation of the purchase price, as the Company continues to evaluate information relevant to its determination of the fair value of the assets and liabilities acquired, and are subject to revision during the remainder of the measurement period, a period not to

exceed twelve months from the acquisition date. See below for further discussion of intangible assets acquired and Note 13 (“Fair Value Measurement”) for the impact of the allocation adjustments on the Company’s financial liabilities.

The following table presents the details of intangible assets as of the acquisition date, inclusive of purchase price adjustments outlined above (in millions, except as stated). All acquired intangible assets with finite lives are amortized using the straight-line method.

	Cboe Asia Pacific		Useful Life (Years)	Cboe Digital		Useful Life (Years)	NEO		Useful Life (Years)
Trading registrations and licenses	$	6.2	Indefinite	$	25.0	Indefinite	$	15.1	Indefinite
Customer relationships		60.1	30		—			37.4	15
Technology		7.5	2		70.0	10		16.2	7
Trademarks and tradenames		—			—			0.4	5
Total identifiable intangible assets	$	73.8		$	95.0		$	69.1

Acquisition-related costs relate to acquisitions and other strategic opportunities. The Company expensed $1.6 million of acquisition-related costs during the three months ended September 30, 2022, all of which related to professional fees and other expenses. The Company expensed $6.7 million of acquisition-related costs during the three months ended September 30, 2021, all of which related to professional fees and other expenses. These acquisition-related expenses are included in acquisition-related costs in the condensed consolidated statements of income.

The Company expensed $17.9 million of acquisition-related costs during the nine months ended September 30, 2022, all of which related to professional fees and other expenses. The Company expensed $11.9 million of acquisition-related costs during the nine months ended September 30, 2021, which primarily included $11.3 million of professional fees and other expenses and $0.6 million of impairment charges related to facilities. These acquisition-related expenses are included in acquisition-related costs in the condensed consolidated statements of income.