Acquisitions

6 Months Ended

Jun. 30, 2020

Acquisitions

Acquisition

4. Acquisitions

On April 24, 2020, we acquired all of the issued and outstanding capital stock of incapptic Connect GmbH (“incapptic”), a privately held company based in Germany that provides automated mobile application distribution software, for $5.9 million in cash. Our unified endpoint management platform integrates with the incapptic software to help customers develop, deploy and secure in-house business applications. Of the $5.9 million paid, $1.1 million was paid to an escrow account and will be distributed to former incapptic shareholders within 24 months, less any amounts used to satisfy any claims for indemnification that we may make for certain breaches of representations, warranties and covenants.

Transaction costs associated with the acquisition were $242,000 and $347,000 in the three and six months ended June 30, 2020, respectively, and are included in general and administrative expenses.

We accounted for the incapptic acquisition as a business combination. We allocated the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition. We engaged an independent third-party valuation firm to assist us in the determination of the value of the purchased intangible assets. The methodologies used to value the intangible assets were relief from royalty for tradename, multi-period excess earnings for contractual customer relationships and the cost approach for developed technology. The excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill, which will not be amortized and is not deductible for tax purposes. The goodwill generated from the business combination was primarily related to the value placed on expected synergies and the value of the acquired workforce. Although we believe the purchase price allocation is substantially complete, the finalization of certain liabilities, or tax-related issues, among other things, could result in a future adjustment to the purchase price allocation. The preliminary purchase price allocation is as follows (in thousands):

Intangible assets:
Tradename	$	163
Contractual customer relationship		1,415
Developed technology		1,546
Goodwill		2,932
Cash		279
Unearned revenue		(275)
Other assets and liabilities, net		(113)
Net assets acquired	$	5,947

The tradename, contractual customer relationship and developed technology intangible assets are being amortized on a straight-line basis over estimated useful lives of 3, 5 and 4 years, respectively.

Incapptic has been included in our condensed consolidated results of operations since the date of acquisition. Pro forma results of operations for the acquisition have not been presented because the acquisition was not material to our condensed consolidated statement of operations.