Purchase price consideration for all acquisitions was paid primarily in cash. All acquisitions, except as otherwise stated, were for 100 percent of the acquired business and are reported in the Consolidated Statement of Cash Flows, net of acquired cash and cash equivalents.

During the nine months ended September 30, 2021, the company completed ten acquisitions at an aggregate cost of $3,049 million. Each acquisition is expected to enhance the company’s portfolio of products and services capabilities and further advance IBM’s hybrid cloud and AI strategy.

The following table reflects the purchase price related to these acquisitions and the resulting purchase price allocations as of September 30, 2021.

N/A – not applicable

The goodwill generated is primarily attributable to the assembled workforce of the acquired businesses and the increased synergies expected to be achieved from the integration of the acquired businesses into the company’s various integrated solutions and services neither of which qualifies as an amortizable intangible asset.

The valuation of the assets acquired and liabilities assumed is subject to revision. If additional information becomes available, the company may further revise the purchase price allocation as soon as practical, but no later than one year from the acquisition date; however, material changes are not expected.

Turbonomic—The overall weighted-average useful life of the identified amortizable intangible assets acquired was 8.9 years. Goodwill of $1,372 million and $67 million was assigned to the Cloud & Cognitive Software and Global Business Services segments, respectively. It is expected that none of the goodwill will be deductible for tax purposes.

Other acquisitions—The overall weighted-average useful life of the identified amortizable intangible assets acquired was 6.5 years. Goodwill of $628 million, $283 million and $2 million was assigned to the Global Business Services, Cloud & Cognitive Software and Global Technology Services segments, respectively. It is expected that approximately 9 percent of the goodwill will be deductible for tax purposes.

The identified intangible assets will be amortized on a straight-line basis over their useful lives, which approximates the pattern that the assets’ economic benefits are expected to be consumed over time.

In October 2021, the company entered into a definitive agreement to acquire a privately held application development and cloud computing services company. Upon closing, the acquired business will be integrated into the Global Business Services segment. In October 2021, the company also announced it had entered into a definitive agreement with McDonald’s to acquire McD Tech Labs to further accelerate the development and deployment of its Automated Order Taking (AOT) technology. Upon closing, McD Tech Labs will be integrated into the Cloud & Cognitive Software segment. In November 2021, the company announced it had entered into a definitive agreement to acquire ReaQta, a provider of endpoint security solutions designed to leverage AI to automatically identify and manage threats. Upon closing, ReaQta will be integrated into the Cloud & Cognitive Software segment. All acquisitions are expected to close in the fourth quarter of 2021, subject to customary closing conditions, including regulatory clearance.

Divestitures

In the third quarter of 2021, the company completed the sale of its remaining OEM commercial financing capabilities reported within the Global Financing segment. In addition, IBM completed two divestitures in the Cloud & Cognitive Software segment one in the second quarter and one in the third quarter of 2021. The financial terms related to each of these transactions were not material.

In October 2021, the company entered into a definitive agreement to sell certain intelligence analysis capabilities reported within the Cloud & Cognitive Software segment. The transaction is expected to close in the fourth quarter of 2021, subject to the satisfaction of applicable regulatory requirements and customary closing conditions. The financial terms related to this transaction are not expected to have a material impact to IBM's consolidated financial statements.