Note 11—Acquisitions

Primatics Financial

On November 16, 2015, SS&C purchased all of the outstanding stock of Primatics for approximately $127.6 million, plus the costs of effecting the transaction and the assumption of certain liabilities. Primatics provides cloud-based integrated risk, compliance and financing solution for the banking industry.

The net assets and results of operations of Primatics have been included in the Company’s consolidated financial statements from November 16, 2015. The fair value of the intangible assets, consisting of customer relationships, completed technology and trade name, was determined using the income approach. Specifically, the relief-from-royalty method was utilized for the completed technology and trade name and the excess earnings method was utilized for the customer relationships. The intangible assets are amortized each year based on the ratio that the projected cash flows for the intangible assets bear to the total of current and expected future cash flows for the intangible assets. The completed technology is amortized over approximately ten years, customer relationships are amortized over approximately one to 15 years and trade name are amortized over approximately ten years, in each case the estimated lives of the assets. The remainder of the purchase price was allocated to goodwill and is not tax deductible.

There are $6.5 million in revenues from Primatics operations included in the Consolidated Statement of Comprehensive Income for the year ended December 31, 2015.

Varden Technologies

On September 1, 2015, SS&C purchased the assets of Varden for approximately $25.3 million, plus the costs of effecting the transaction and the assumption of certain liabilities. Varden provides cloud-based client and advisor communication solutions for investment firms.

The net assets and results of operations of Varden have been included in the Company’s consolidated financial statements from September 1, 2015. The fair value of the intangible assets, consisting of customer relationships, completed technology, trade name and a non-compete agreement, was determined using the income approach. Specifically, the relief-from-royalty method was utilized for the completed technology and trade name, the excess earnings method was utilized for the customer relationships and the lost profits method was utilized for the non-compete agreement. The intangible assets are amortized each year based on the ratio that the projected cash flows for the intangible assets bear to the total of current and expected future cash flows for the intangible assets. The completed technology is amortized over approximately eight years, customer relationships and trade name are amortized over approximately ten years and the non-compete agreement is amortized over approximately three years, in each case the estimated lives of the assets. The remainder of the purchase price was allocated to goodwill and is tax deductible.

There are $2.5 million in revenues from Varden operations included in the Consolidated Statement of Comprehensive Income for the year ended December 31, 2015.

Advent Software, Inc.

On July 8, 2015, the Company purchased all of the outstanding stock of Advent for approximately $2.6 billion in cash, equating to $44.25 per share plus the costs, fees and expenses associated with the transaction, in part, using the equity and debt financing discussed in Notes 4 and 6. Advent provides software and services for the global investment management industry.

The net assets and results of operations of Advent have been included in the Company’s consolidated financial statements from July 8, 2015. The fair value of the intangible assets, consisting of customer relationships, completed technology and trade name, was determined using the income approach. Specifically, the relief-from-royalty method was utilized for the completed technology and trade name, and the excess earnings method was utilized for the customer relationships. The intangible assets are amortized each year based on the ratio that the projected cash flows for the intangible assets bear to the total of current and expected future cash flows for the intangible assets. The completed technology is amortized over approximately twelve years, customer relationships are amortized over approximately twelve years and trade name is amortized over approximately ten years, in each case the estimated lives of the assets. The remainder of the purchase price was allocated to goodwill and is not tax deductible.

There are $155.8 million in revenues from Advent operations included in the Consolidated Statement of Comprehensive Income for the year ended December 31, 2015.

DST Global Solutions

On November 30, 2014, SS&C purchased the assets of DSTGS for approximately $95.0 million, plus the costs of effecting the transaction and the assumption of certain liabilities. DSTGS provides investment management software and services.

The net assets and results of operations of DSTGS have been included in the Company’s consolidated financial statements from December 1, 2014. The purchase price was allocated to tangible and intangible assets based on their fair value at the date of acquisition. The fair value of the intangible assets, consisting of completed technology, customer relationships and trade name, was determined using the income approach. Specifically, the discounted cash flows method was utilized for customer relationships, and the relief-from-royalty method was utilized for the completed technology and trade name. The completed technology is amortized over approximately seven and eight years, customer relationships are amortized over approximately 10 to 15 years and trade names are amortized over approximately 10 years, in each case the estimated lives of the assets. The remainder of the purchase price was allocated to goodwill and is primarily not tax deductible.

The following summarizes the allocation of the purchase price for the acquisitions of Primatics, Varden, Advent and DSTGS (in thousands):

	Primatics			Varden			Advent			DSTGS
Accounts receivable	$	9,337		$	1,186		$	57,326		$	8,866
Fixed assets		2,956			26			15,898			2,074
Other assets		3,439			—			20,510			3,392
Acquired client relationships and contracts		36,980			9,000			823,000			17,200
Completed technology		33,900			3,700			311,000			34,200
Trade names		4,100			300			18,000			4,300
Non-compete agreements		—			100			—			—
Goodwill		61,685			12,925			1,956,841			66,444
Deferred revenue		(5,330	)		(835	)		(90,126	)		(10,185	)
Deferred income taxes		(24,943	)		—			(424,489	)		(11,626	)
Other liabilities assumed		(6,943	)		(3,268	)		(91,428	)		(19,703	)
Consideration paid, net of cash acquired	$	115,181		$	23,134		$	2,596,532		$	94,962

Additionally, the Company acquired Prime in October 2013 for approximately $4.0 million.

The consideration paid, net of cash acquired for Advent above includes $11.8 million of non-cash consideration related to the fair value of unvested acquired equity awards with a pre-acquisition service period. This amount is excluded from “Cash paid for business acquisitions, net of cash acquired” for the year ended December 31, 2015 on the Company’s Consolidated Statement of Cash Flows.

The consideration paid, net of cash acquired above for DSTGS includes a working capital adjustment of $7.9 million, which was paid in the second quarter of 2015. This amount is included in “Cash paid for business acquisitions, net of cash acquired” for the year ended December 31, 2015 on the Company’s Consolidated Statement of Cash Flows.

The fair value of acquired accounts receivable balances approximates the contractual amounts due from acquired customers, except for approximately $0.4 million, $2.6 million and $0.5 million of contractual amounts that are not expected to be collected as of the acquisition date and that were also reserved by the companies acquired – Primatics, Advent and DSTGS, respectively.

The goodwill associated with each of the transactions above is a result of expected synergies from combining the operations of businesses acquired with the Company and intangible assets that do not qualify for separate recognition, such as an assembled workforce.

The following unaudited pro forma condensed consolidated results of operations are provided for illustrative purposes only and assume that the acquisitions of Primatics, Varden and Advent occurred on January 1, 2014 and DSTGS occurred on January 1, 2013. This unaudited pro forma information (in thousands, except per share data) should not be relied upon as being indicative of the historical results that would have been obtained if the acquisitions had actually occurred on that date, nor of the results that may be obtained in the future.

	2015		2014
Revenues	$	1,303,843	$	1,208,148
Net income (loss)	$	43,772	$	(49,718	)
Basic EPS	$	0.48	$	(0.60	)
Basic weighted average number of common shares outstanding		91,098		83,314
Diluted EPS	$	0.46	$	(0.60	)
Diluted weighted average number of common and common equivalent shares outstanding		95,448		83,314

Pending acquisitions

On August 18, 2015, the Company announced the acquisition of Citigroup’s Alternative Investor Services business, which includes Hedge Fund Services and Private Equity Fund Services, for $425 million, subject to certain adjustments. The transaction is subject to approvals by relevant regulatory authorities and other customary closing conditions. The transaction is expected to close in the first quarter of 2016.