Acquisitions

3 Months Ended

Mar. 31, 2021

Sensis Acquisition

On March 1, 2021 (the “Acquisition Date”), Thryv Australia Pty Ltd. (“Buyer”), an Australian proprietary limited company and a direct wholly-owned subsidiary of Thryv International Holdings LLC, a direct and wholly owned subsidiary of the Company, acquired all of the issued and outstanding equity interests of (i) Sunshine NewCo Pty Ltd, an Australian proprietary limited company, and its subsidiaries, and (ii) Sensis Holding Limited (“Sensis”), a private limited company incorporated under the laws of England and Wales, and its subsidiaries (collectively, the “Acquisition”). The Acquisition expanded the Company's market share with a broader geographical footprint. Additionally, the acquisition provided the Company with a significant increase in clients. Sensis is a provider of marketing solutions serving SMBs in Australia. Control was obtained by means of acquiring all the voting interests.

In connection with the Acquisition, the Company paid consideration of approximately $215.0 million in cash, subject to customary closing adjustments, financed by a New Term Loan (defined below) that was entered into on the Acquisition Date. All acquisition-related costs, amounting to $8.7 million, were expensed as incurred by the Company and no portion of these costs are included in consideration transferred. These costs were presented within General and administrative expense in the Company's condensed consolidated statement of operations. Additionally, as part of the effort to fund the Acquisition, the Company incurred debt issuance costs of $4.2 million related to a New Term Loan, of which $2.5 million is capitalized and amortized using the effective interest method. See “Note 8, Debt Obligations.”

The Company accounted for the Acquisition using the acquisition method of accounting in accordance with ASC 805 Business Combinations (“ASC 805”). This requires that the assets acquired and liabilities assumed be measured at fair value. The Company determined, using Level 3 inputs, the fair value of certain assets and liabilities including fixed assets, intangible assets, and financing obligations and deferred revenue by applying a combination of the income approach and the cost approach. Specific to intangible assets, client relationships were valued using a combination of the income and excess earnings approach, whereas trade names were valued using a relief of royalty method. The fair values of property, plant and equipment and intangible and other assets acquired and liabilities assumed, have been prepared on a preliminary basis with information currently available. and are subject to change. Management is still reviewing the characteristics and assumptions related to Sensis’s assets acquired and liabilities assumed. The preliminary purchase price allocation is expected to be finalized within 12 months after the Acquisition Date.

The following table summarizes the consideration transferred and the preliminary purchase price allocation of the fair values of the assets acquired and liabilities assumed at the Acquisition Date (in thousands):


Total cash consideration	$	214,984
Total purchase consideration, as allocated below:	$	214,984

Cash and cash equivalents	$	40,794
Accounts receivable and other current assets	88,529
Other assets	11,801
Fixed assets and capitalized software	40,957
Intangible assets:
Client relationships (useful life 3.5 years)	101,839
Trademarks (useful life 3.5 years)	24,877
Accounts payable	(31,163)
Accrued liabilities	(39,654)
Contract liabilities	(27,075)
Other current liabilities	(11,641)
Deferred tax liabilities	(40,497)
Other liabilities	(15,505)
Total identifiable net assets	$	143,262
Goodwill	71,722
Total net assets acquired	$	214,984

The excess of the purchase price over the fair value of the identifiable net assets acquired and the liabilities assumed was allocated to goodwill. The recognized goodwill of $71.7 million was primarily related to the benefits expected from the acquisition as is allocated to the Thryv International segment. The goodwill recognized is not deductible for income tax purposes.

The Acquisition contributed $15.4 million in revenue and $(4.0) million in net (loss) since the Acquisition Date.

Pro Forma Results

The pro forma condensed combined financial information presented below was derived from historical financial records of Thryv and Sensis and presents the operating results of the combined Company, with results prior to the Acquisition Date adjusted as if the Acquisition had occurred January 1, 2020. The pro forma data gives effect to historical operating results with adjustments to interest expense, amortization and depreciation expense and related tax effects.

The pro forma financial information is not necessarily indicative of the consolidated results of operations that would have been realized had the Sensis Acquisition been completed as of January 1, 2020, nor is it meant to be indicative of future results of operations that the combined entity will experience (in thousands):


	Three Months Ended March 31,
	2021		2020
Revenue	$	318,752	$	359,204
Net income	52,415		13,073