On September 29, 2022, the Company acquired 100% of the equity of Eleviant for approximately $19.0 million, including $17.4 million of cash on hand. In addition to the cash payment, Eleviant owners and executives were issued 173,802 shares of common stock valued at $1.2 million, and 200,000 stock options from the 2020 Equity Award Plan at the date of acquisition, valued at $0.4 million.

The U.S.-based Eleviant is a provider of digital transformation services and solutions, and is headquartered in Dallas, TX, with operations in Chennai and Coimbatore, India. Eleviant’s offerings support the new ways enterprises work, communicate, and scale today and focus on cloud, application modernization, mobile, artificial intelligence (AI), machine learning (ML), and robotic process automization (RPA). Eleviant’s services are supported by a portfolio of supporting solutions, including PeopleOne, a Digital Workplace platform for employee engagement, communication, and collaboration; vChat, a chatbot builder platform; and vBots, an RPA builder platform. The acquisition is expected to aid CTG in accelerating the growth of digital solutions sales to clients in the Americas and Europe and create new points of entry with proven technology services and solutions.

The results of operations of Eleviant have been included in the Company’s consolidated financial results since the date of acquisition. As the Company has determined that the acquisition is not material to its existing operations, certain disclosures, including proforma financial information, have not been included in this annual report on Form 10-K.

An earn-out of $5.0 million can be earned, a portion of which will be payable in each period subject to the achievement of revenue and gross profit targets for fiscal 2022, 2023 and 2024. Additionally, for each $10,000 of gross profit or revenue achieved above the targets, an additional $2,000 can be earned, with no maximum limit. There is no payout if the achievement is below the target threshold. However, in subsequent years, if the preceding year’s targets were not met, an earn-out can be earned for both years if the combined total for gross profit or revenue for the two years exceeds the combined two-year targets. The fair value as of the September 29, 2022 acquisition date was $4.0 million. The remaining fair value of the remaining contingent consideration liability was determined to be approximately $4.0 million as of December 31, 2022. Approximately $0.9 million and $3.1 million of the remaining contingent consideration liabilities is recorded in "Other current liabilities" and "Other long-term liabilities", respectively, on the consolidated balance sheet as of December 31, 2022.

The acquisition fair value of the consideration for the acquisition of Eleviant consisted of the following as of September 29, 2022:


(amounts in thousands)
Cash consideration	$	17,382
Share issuance		1,178
Stock option issuance - 3 month vest		166
Stock option issuance - 12 month vest		225
Fair value of contingent consideration		4,000
Fair value of purchase consideration	$	22,951

The following table summarizes the allocation of the aggregate purchase price consideration to the fair value of the assets acquired and liabilities assumed as of September 29, 2022:


(amounts in thousands)
Assets Acquired:
Cash	$	755
Accounts receivable		1,605
Prepaids and other current assets		178
Property and equipment, net		437
Taxes receivable		48
Acquired intangibles		7,250
Goodwill		17,439
Total assets acquired	$	27,712

Liabilities Assumed:
Accounts payable	$	492
Short-term debt		601
Accrued compensation		355
Other current liabilities		205
Long-term debt		982
Deferred compensation benefits		324
Deferred tax liability		1,802
Total liabilities assumed		4,761
Net assets acquired	$	22,951

At December 31, 2022, the Company allocated value to current assets and liabilities based on book values at September 29, 2022, which approximates fair value. The excess consideration was recorded as goodwill, which is not deductible for income tax purposes, and is driven by Eleviant providing a high level of digital IT solutions and offshore delivery capabilities.


(amounts in thousands)	Fair Value		Estimated Economic Life
Technology	$	550	10 years
Customer relationships		6,700	10 years
Fair value of purchase consideration	$	7,250

The Company incurred acquisition-related legal and consulting fees, expenses related to retention bonuses, and amortization of intangible assets of approximately $0.8 million in 2022, which were recorded as a component of selling, general, and administrative expenses in the consolidated statements of income. The accounting for this acquisition was updated in the fourth quarter of 2022, including an allocation to intangible assets of $7.3 million, but the preliminary purchase accounting for intangible assets has not yet been finalized as of December 31, 2022.

On March 3, 2020, the Company acquired 100% of the equity of StarDust, for approximately $6.1 million (€5.5 million based on a EUR into USD exchange rate of 1.1145). The acquisition was funded using cash on hand and borrowings under the Credit and Security Agreement. The France-based StarDust, is a leading provider of testing and quality assurance for digital services with offices in Marseille, France, and Montreal, Canada. StarDust offers a complete range of testing services, including functional, multilingual, operational, environmental, regression, and application benchmarking, covering digital services and website, software, mobile applications, and Internet of Things connected objects. The acquisition expanded the Company’s global testing capabilities.

The results of operations of StarDust have been included in the Company’s consolidated financial results since the date of acquisition. As the Company has determined that the acquisition is not material to its existing operations, certain disclosures, including proforma financial information, have not been included in this annual report on Form 10-K.

An earn-out of up to $1.1 million (€1.0 million based on a EUR into USD exchange rate of 1.1145) can be earned, a portion of which will be payable in each period subject to the achievement of consolidated direct profit targets for fiscal 2020 and 2021. Additionally, for each €10,000 of consolidated direct profit achieved above the target, an additional €1,000 can be earned, with no maximum limit. There is no payout if the achievement is below the target threshold. The fair value as of the March 3, 2020 acquisition date was determined to be $0.1 million. During 2021, the Company paid $0.3 million relating to the earn-out based on the achievement by StarDust of consolidated direct profit targets for the fiscal year 2020. As of December 31, 2021, the fair value of the remaining contingent consideration liability was determined to be zero as the consolidated direct profit targets were not met by StarDust for the fiscal year 2021.

The acquisition date fair value of the consideration for the acquisition of StarDust consisted of the following as of March 3, 2020:


(amounts in thousands)
Cash consideration	$	6,122
Fair value of contingent consideration		111
Fair value of purchase consideration	$	6,233

The following table summarizes the allocation of the aggregate purchase consideration to the fair value of the assets acquired and liabilities assumed as of March 3, 2020:


(amounts in thousands)
Assets Acquired:
Cash	$	1,798
Accounts receivable		1,303
Prepaids & other		71
Property & equipment, net		327
Acquired intangibles		1,282
Goodwill		2,757
Total assets acquired	$	7,538

Liabilities Assumed:
Accounts payable	$	285
Accrued compensation		307
Taxes payable		222
Other liabilities		163
Deferred income taxes		328
Total liabilities assumed	$	1,305
Net assets acquired	$	6,233

The purchase consideration for the acquisition was allocated to the assets acquired and liabilities assumed based upon their respective fair values. The excess consideration was recorded as goodwill, which is not deductible for income tax purposes.


(amounts in thousands)	Fair Value		Estimated Economic Life
Trademarks	$	100	2 years
Technology		591	10 years
Customer relationships		591	7 years
Fair value of purchase consideration	$	1,282

The Company incurred adjustments to the fair value of the earn-out liability, and amortization of intangible assets of approximately $0.1 million and $(0.2) million in 2022 and 2021, respectively, which were recorded as a component of selling, general, and administrative expenses in the consolidated statements of income. The purchase price allocation for this acquisition has been finalized.