Acquisitions

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisitions

Tacit — On May 29, 2021, the Company acquired 100% of the equity interest of the global consultancy company Tacit Knowledge Inc. (“Tacit”). Founded in 2002, Tacit is a global provider of digital commerce solutions, serving customers across the UK, North America, Continental Europe, and Asia. The acquisition of Tacit added approximately 180 employees to the Company's headcount. The acquisition will augment the Company's service offerings and will strengthen its competitive position within the market. Additionally, the acquisition also enabled the Company to leverage near-shore capabilities with Tacit's presence in Mexico.

The total purchase consideration is $37.6 million and consists of cash consideration of $33.6 million paid at closing, and fair value of the contingent consideration at the date of the acquisition of $4.0 million. The maximum amount of potential contingent cash consideration is $5.0 million. During the fourth quarter of 2021 the Company adjusted fair value of contingent consideration as of December 31, 2021 to its maximum amount and reflected the expense in its consolidated statement of loss. The contingent consideration is payable based on revenue and EBITDA metrics to be achieved by Tacit within 12 months. The Company recorded a liability for the contingent consideration amount based on the Company’s best estimate of the fair value of the expected payout. See Note 4 for further details on contingent consideration.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed. There were no measurement period adjustments for the quarter ended March 31, 2022 for Tacit:

	Tacit
Current assets	$	9,145
Property, plant and equipment	466
Intangible assets	12,913
Goodwill	21,268
Total assets acquired	$	43,792
Accounts payable and accrued expenses	(3,675)
Deferred taxes	(2,500)
Total liabilities assumed	$	(6,175)
Purchase price allocation	$	37,617

Current assets acquired include cash and cash equivalents in the amount of $3.0 million. The purchase price was assigned to assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition, and any excess was allocated to goodwill, as shown in the table above. Goodwill represents the value the Company expects to achieve through the implementation of operational synergies and growth opportunities as the Company expands its global reach. The goodwill for Tacit is not deductible for income tax purposes. 

During the second half of 2021 the Company updated fair value of contingent consideration for Tacit at acquisition date that resulted in the increase of goodwill for $0.7 million. During the fourth quarter of 2021, the Company finalized the fair value of the assets acquired and liabilities assumed in the acquisition of Tacit.

The estimated fair value, useful lives and amortization methods of identifiable intangible assets as of the date of acquisition updated for any changes during March 31, 2022 are as follows:

Tacit	Fair Value		Useful Life	Amortization method
Customer relationships	$	11,737	12 years	Straight-line
Trade name	1,176		4 years	Declining balance
Total Tacit identified intangible assets	$	12,913

The acquisition of Tacit was accounted for using the acquisition method of accounting, and consequently, the results of operations for Tacit are reported in the consolidated financial statements from the date of acquisition. Tacit revenue was approximately $7.1 million during three months ended March 31, 2022.

The following unaudited pro forma information presents the combined results of operations as if the acquisition of Tacit had occurred at the beginning of 2021. Tacit pre-acquisition results have been added to the Company’s historical results. The pro forma results contained in the table below include adjustment for amortization of acquired intangibles. Any potential cost savings or other operational efficiencies that could result from the acquisition are not included in these pro forma results. 

These pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations as they would have been had the acquisitions occurred on the assumed dates, nor are they necessarily an indication of future operating results.

	Three Months Ended March 31,
(Unaudited)	2022		2021
Revenue	$	71,410	$	43,415
Net loss	$	(2,667)	$	(1,721)
Diluted loss per share	$	(0.04)	$	(0.03)