XML 113 R14.htm IDEA: XBRL DOCUMENT

ACQUISITIONS

12 Months Ended

Dec. 31, 2019

We periodically complete business combinations that align with our business strategy. Our acquisitions during the past 3 years were all cash transactions, funded by use of our revolving credit facility. We completed these acquisitions primarily to increase our mix of marketing solutions and other services revenue, to add financial technology and web services capabilities, to improve our product and service offerings and to reach new customers. Transaction costs related to these acquisitions totaled $215 in 2019, $1,719 in 2018 and $2,342 in 2017.

2019 acquisitions – During 2019, we completed the following acquisitions in our Financial Services segment:

•

In December 2019, we acquired selected assets comprising the remittance processing business of Fiserv, Inc., including its lockbox processing services. The preliminary allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $4,174. The acquisition resulted in goodwill as it allows us to extend out expertise and reach with the addition of a reseller arrangement through the banking sales channel of Fiserv. We expect to finalize the allocation of the purchase price by the second quarter of 2020, when our valuation of the acquired intangible assets and various other assets acquired is complete.


•	In December 2019, we acquired selected assets comprising the remittance processing business of Synchrony Financial. We expect to finalize the allocation of the purchase price by the second quarter of 2020, when our valuation of the acquired intangible assets, as well as various other assets acquired and liabilities assumed, is complete.

2018 acquisitions – During 2018, we completed the following acquisitions that were included within our Small Business Services segment:

•

In March 2018, we acquired all of the equity of Logomix Inc. (Logomix), a self-service marketing and branding platform that helps small businesses create logos and custom marketing products. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in nondeductible goodwill of $29,451. The acquisition resulted in goodwill as we expected to accelerate revenue growth by combining our capabilities with Logomix's platform.

•

In June 2018, we acquired selected assets of Velocity Servers, Inc., doing business as ColoCrossing, a data center solutions, cloud hosting and infrastructure colocation provider of dedicated hosting services. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $9,082. The acquisition resulted in goodwill as we expected to accelerate revenue growth by bringing colocation services into our portfolio of hosting services.

•

In December 2018, we acquired selected assets of My Corporation Business Services, Inc., a provider of business incorporation and organization services. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $20,615. The acquisition resulted in goodwill as we expected to accelerate revenue growth by bringing these services into our portfolio of web services.


•	During 2018, we acquired the operations of 3 small business distributors. The assets acquired consisted primarily of customer list intangible assets. As these small business distributors were previously part of our Safeguard distributor network, our revenue was not impacted by these acquisitions, and the impact to our costs was not significant.

Within our Financial Services segment, we acquired the equity of REMITCO LLC (RemitCo) in August 2018. RemitCo was the remittance processing business of First Data Corporation, which subsequently merged with Fiserv, Inc. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $44,992 and a customer list intangible asset of $36,000. The acquisition resulted in goodwill as it expanded the scale of our receivables management solutions, which allows us to take advantage of the ongoing market trend toward outsourcing technology-enabled services to trusted financial technology partners of scale.

2017 acquisitions – During 2017, we completed the following acquisitions that were included within our Small Business Services segment:

•

In February 2017, we acquired selected assets of Panthur Pty Ltd (Panthur), an Australian web hosting and domain registration service provider. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in nondeductible goodwill of $1,198. The acquisition resulted in goodwill as we used Panthur's platform to selectively expand into foreign markets.

•

In July 2017, we acquired all of the equity of Digital Pacific Group Pty Ltd (Digital Pacific), an Australian web hosting and domain registration service provider. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in nondeductible goodwill of $23,773. The acquisition resulted in goodwill as we acquired enhanced web hosting capabilities that we used to selectively expand into foreign markets.

•

In September 2017, we acquired all of the equity of j2 Global Australia Pty Ltd, doing business as Web24, an Australian web hosting and domain registration service provider. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in nondeductible goodwill of $2,731. The acquisition resulted in goodwill as we used Web24's platform to selectively expand into foreign markets.


•	In November 2017, we acquired selected assets of Impact Marketing Specialists, Inc., which provides marketing solutions to real estate agents.

•

In December 2017, we acquired selected assets of SY Holdings, LLC, doing business as managed.com, a web hosting services provider. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $266. The acquisition resulted in goodwill as the expertise we acquired improved our customer mix and enhanced our portfolio of web services.


•	During 2017, we acquired the operations of several small business distributors. The assets acquired consisted primarily of customer list intangible assets. All but 1 of these distributors were previously part of our Safeguard distributor network. As such, our results of operations were not significantly impacted by these acquisitions.

Within our Financial Services segment, we acquired all of the equity of RDM Corporation (RDM) of Canada in April 2017. RDM is a provider of remote deposit capture software, hardware and digital imaging solutions for financial institutions and corporate clients. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities

assumed resulted in nondeductible goodwill of $35,973. The acquisition resulted in goodwill as it enhanced our selection of treasury management solutions, strengthening our value proposition and improving our market position.

Aggregate information – Information regarding goodwill by reportable segment and the useful lives of acquired intangibles can be found in Note 3. Information regarding the calculation of the estimated fair values of the acquired intangibles can be found in Note 8. As our acquisitions were not significant to our reported operating results both individually and in the aggregate, pro forma results of operations are not provided.

The following illustrates the allocation of the aggregate purchase price for the above acquisitions to the assets acquired and liabilities assumed:



(in thousands)	2019 acquisitions⁽¹⁾			2018 acquisitions⁽²⁾			2017 acquisitions⁽³⁾
Net tangible assets acquired and liabilities assumed⁽⁴⁾	$	2,735		$	8,200		$	(1,956	)
Identifiable intangible assets:
Customer lists/relationships	5,815			60,587			58,620
Trade names	—			14,700			10,000
Technology-based intangibles	—			7,500			800
Software to be sold	—			—			2,200
Internal-use software	276			—			1,445
Total intangible assets	6,091			82,787			73,065
Goodwill	4,174			104,140			63,941
Total aggregate purchase price	13,000			195,127			135,050
Liabilities for holdback payments and contingent consideration⁽⁵⁾	(3,000		)	(1,078		)	(5,980		)
Non-cash consideration⁽⁶⁾	—			(1,060		)	—
Net cash paid for current year acquisitions	10,000			192,989			129,070
Holdback payments for prior year acquisitions	1,605			21,269			10,153
Payments for acquisitions, net of cash acquired⁽⁷⁾	$	11,605		$	214,258		$	139,223

⁽¹⁾Net tangible assets acquired and liabilities assumed for 2019 consisted primarily of operating lease assets and property, plant and equipment, as well as operating lease liabilities.

⁽²⁾Net tangible assets acquired and liabilities assumed for 2018 consisted primarily of REMITCO accounts receivable and Logomix deferred income tax liabilities. Amounts include measurement-period adjustments recorded in 2019 for the finalization of purchase accounting for certain of the 2018 acquisitions. These adjustments decreased goodwill $1,766, with the offset to various assets and liabilities, including a $1,000 increase in customer list intangible assets.

⁽³⁾Net tangible assets acquired and liabilities assumed for 2017 consisted primarily of accounts receivable, marketable securities, inventory and accrued liabilities of RDM and Digital Pacific. Amounts include measurement-period adjustments recorded in 2018 for the finalization of purchase accounting for several of the 2017 acquisitions. These adjustments increased goodwill $4,183, with the offset to various assets and liabilities, including deferred revenue, deferred income taxes and other long-term liabilities, as well as a decrease of $1,654 in customer list intangibles and an increase in internal-use software of $1,000.

⁽⁴⁾ Net tangible assets acquired included trade accounts receivable of $11,564 during 2018 and $4,544 during 2017.

⁽⁵⁾Consists of holdback payments due at future dates and liabilities for contingent consideration, which were not significant.

⁽⁶⁾Consists of pre-acquisition amounts owed to us by certain of the acquired businesses.

⁽⁷⁾Cash and cash equivalents acquired were $1,692 during 2018 and $27,299 during 2017.