Acquisitions

Below is a summary of the acquisitions we completed during 2017 and 2016 (we did not complete any acquisitions in 2015).

2017 Acquisitions

The following table summarizes the purchase prices and purchase price allocations for the acquisitions completed during the year ended December 31, 2017. A description of the acquired businesses is summarized below the table.



Acquired company	YouTrain		CLS		Emantras		McKinney Rogers

Acquisition date	8/31/2017		8/31/2017		4/1/2017		2/1/2017

Cash purchase price	$	4,898	$	436	$	3,191	$	3,259
Fair value of contingent consideration	—		888		220		4,505
Working capital adjustment	180		—		—		—
Total purchase price	$	5,078	$	1,324	$	3,411	$	7,764

Purchase price allocation:
Cash	$	673	$	—	$	—	$	—
Accounts receivable and other assets	234		—		—		—
Fixed assets	215		—		50		—
Technology-related intangible assets	—		—		—		2,704
Customer-related intangible assets	1,313		253		818		653
Marketing-related intangible assets (tradename)	—		—		—		121
Goodwill	3,268		1,090		3,156		5,196
Total assets	5,703		1,343		4,024		8,674

Accounts payable and accrued expenses	348		19		558		44
Billings in excess of costs and estimated earnings on uncompleted contracts	28		—		55		866
Deferred tax liability	249		—		—		—
Total liabilities	625		19		613		910

Net assets acquired	$	5,078	$	1,324	$	3,411	$	7,764

YouTrain

On August 31, 2017, we acquired the entire share capital of YouTrain Limited ("YouTrain"), an independent training company delivering IT, digital and life sciences skills training in Scotland and North West England. The upfront purchase price was $4.9 million which was paid in cash at closing and a completion accounts payment of $0.2 million was paid to the sellers during the fourth quarter of 2017. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired YouTrain business is included in the Learning Solutions segment and the results of its operations have been included in the consolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. The acquired YouTrain business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.

CLS Performance Solutions Limited

On August 31, 2017, we acquired the business and certain assets of CLS Performance Solutions Limited ("CLS"), an independent provider of Enterprise Resource Planning (ERP) end user adoption and training services in the United Kingdom. The upfront purchase price was $0.4 million which was paid in cash at closing. In addition, the purchase agreement requires up to an additional $2.2 million of consideration contingent upon the achievement of certain earnings targets during the twelve-month period following the completion of the acquisition. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired CLS business is included in the Performance Readiness Solutions segment, and the results of its operations have been included in the consolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. The acquired CLS business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.

Emantras

Effective April 1, 2017, we acquired the business and certain assets of Emantras, a digital education company that provides engaging learning experiences and effective knowledge delivery through award-winning digital and mobile solutions with offices in Fremont, California and Chennai, India. This acquisition strengthens our eLearning development capabilities, allowing us to better serve our customer base with the latest digital learning solutions. The upfront purchase price was $3.2 million in cash. In addition, the purchase agreement requires up to an additional $0.3 million of consideration, contingent upon the achievement of an earnings target during the twelve-month period following completion of the acquisition, plus a percentage of any earnings in excess of the specified earnings target. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. We expect that a portion of the goodwill recorded for financial statement purposes will be deductible for tax purposes. In addition, contingent consideration is only deductible when paid. If the actual contingent consideration payments are less than the estimated fair value as of the acquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired Emantras business is included in the Learning Solutions segment, and the results of its operations have been included in the consolidated financial statements beginning April 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. The India-based operations of the acquired Emantras business is included in our India subsidiary and its functional currency is the Indian Rupee.

McKinney Rogers

On February 1, 2017, we acquired the business and certain assets of McKinney Rogers, a provider of strategic consulting services with offices in New York and London. This acquisition will expand our solutions offerings, giving us the ability to leverage McKinney Rogers' intellectual property and consulting methodologies to help our global client base meet strategic business goals. The upfront purchase price was $3.3 million in cash. In addition, the purchase agreement requires up to an additional $18.0 million of consideration, $6.0 million of which was contingent upon the achievement of certain earnings targets during the five-month period ended April 30, 2017 and $12.0 million of which is contingent upon the achievement of certain earnings targets during the three twelve-month periods following completion of the acquisition. In July 2017, we paid the seller $1.0 million in respect of the contingent consideration for the five-month period ended April 30, 2017. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. We expect that a portion of the goodwill recorded for financial statement purposes will be deductible for tax purposes. In addition, contingent consideration is only deductible when paid. If the actual contingent consideration payments are less than the estimated fair value as of the acquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired McKinney Rogers business is included in the Performance Readiness Solutions segment, and the results of its operations have been included in the consolidated financial statements beginning February 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations.

2016 Acquisitions

Jencal Training

On March 1, 2016, we acquired the share capital of Jencal Training Limited (Jencal Training) and its subsidiary B2B Engage Limited (B2B), an independent provider of vocational skills training in the United Kingdom. The upfront purchase price was $2.5 million in cash. In addition, we paid an additional $0.2 million of deferred consideration in the fourth quarter of 2016. The purchase price allocation for the acquisition primarily includes $1.4 million of customer-related intangible assets which are being amortized over four years from the acquisition date and $1.8 million of goodwill. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired Jencal Training business is included in the Learning Solutions segment and the results of its operations have been included in the consolidated financial statements beginning March 1, 2016. The pro-forma impact of the acquisition is not material to our results of operations.

Maverick Solutions

Effective October 1, 2016, we acquired the business and certain assets of Maverick Solutions, a U.S.-based provider of Enterprise Resource Planning (ERP) product training services. The upfront purchase price was $4.6 million in cash. In addition, the purchase agreement requires up to an additional $10.0 million of consideration, contingent upon the achievement of certain earnings targets during the two twelve-month periods following completion of the acquisition. We paid $4.1 million of contingent consideration during the fourth quarter of 2017 in respect of the first twelve-month period ended September 30, 2017. We expect that all of the goodwill recorded for financial statement purposes will be deductible for tax purposes, except that contingent consideration is only deductible when paid. If the actual contingent consideration payments are less than the estimated fair value as of the acquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired Maverick Solutions business is included in the Performance Readiness Solutions segment and the results of its operations have been included in the consolidated financial statements beginning October 1, 2016.The pro-forma impact of the acquisition is not material to our results of operations.

The following table summarizes the purchase price and purchase price allocation for the acquisition (dollars in thousands).



Cash purchase price	$	4,639
Fair value of contingent consideration	5,166
Total purchase price	$	9,805
			Amortization
Purchase price allocation:			Period
Fixed assets	$	63
Customer-related intangible assets	1,219		4 years
Marketing-related intangible assets (tradename)	124		2 years
Technology-related intangible assets	649		3 years
Goodwill	8,111
Total assets	10,166

Accrued expenses	38
Billings in excess of costs and estimated earnings on uncompleted contracts	323
Total liabilities	361

Net assets acquired	$	9,805

Contingent Consideration

Contingent consideration is recognized at fair value on the acquisition date and is re-measured each reporting period with subsequent adjustments recognized in the consolidated statement of operations. We estimate the fair value of contingent consideration liabilities using an appropriate valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of the contingent consideration arrangement. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. We believe our estimates and assumptions are reasonable; however, there is significant judgment involved. At each reporting date, the contingent consideration obligation is revalued to estimated fair value, and changes in fair value subsequent to the acquisitions are reflected in income or expense in the consolidated statements of operations, and could cause a material impact to, and volatility in, our operating results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings projections.

Below is a summary of the potential maximum contingent consideration we may be required to pay in connection with completed acquisitions as of December 31, 2017 (dollars in thousands):



Acquisition:	Original range of potential undiscounted payments	As of December 31, 2017 Maximum contingent consideration due in
		2018		2019		2020		Total
Maverick	$0 - $10,000	$	5,902	$	—	$	—	$	5,902
McKinney Rogers	$0 - $18,000	4,000		4,000		4,000		12,000
Emantras		*		—		—		—
CLS	$0 - $2,228	2,228		—		—		2,228
		$	12,130	$	4,000	$	4,000	$	20,130

* There is no maximum contingent consideration payable to the seller.

Below is a summary of the changes in the recorded amount of contingent consideration liabilities from December 31, 2016 to December 31, 2017 for each acquisition (dollars in thousands):



	Liability as of		2017 Additions		Change in Fair Value of Contingent			Foreign Currency		2017 Payments		Liability as of
Acquisition:	Dec. 31, 2016		2017 Additions		Consideration			Translation		2017 Payments		Dec. 31, 2017
Maverick	$	5,258	—		819			—		(4,098	)	$	1,979
McKinney Rogers	—		4,505		(2,037		)	—		(967	)	1,501
Emantras	—		220		(144		)	—		—		76
CLS	—		888		(258		)	39		—		669
	$	5,258	$	5,613	$	(1,620	)	$	39	(5,065	)	$	4,225

As of December 31, 2017 and 2016, contingent consideration included in accounts payable and accrued expenses on the consolidated balance sheet totaled $2.7 million and $3.6 million, respectively. As of December 31, 2017 and 2016, we also had accrued contingent consideration totaling $1.5 million and $1.7 million, respectively, which is included in other long-term liabilities on the consolidated balance sheet and represents the portion of contingent consideration estimated to be payable greater than twelve months from the balance sheet date.