Acquisitions and Divestiture (Tables)

12 Months Ended

Dec. 31, 2017

Mergers, Acquisitions And Dispositions Disclosures [Abstract]

Schedule of aggregate purchase price for acquisitions

The following table summarizes the aggregate consideration paid for these acquisitions (in thousands):

Aggregate consideration (1):	CEB		L2		Total
Cash paid at close (2), (3)	$	2,687,704	$	134,199	$	2,821,903
Additional cash paid (2)	12,465		—		12,465
Fair value of Gartner equity (4)	818,660		—		818,660
Total (5)	$	3,518,829	$	134,199	$	3,653,028

(1) Includes the total consideration transferred for 100% of the outstanding capital stock of the acquired businesses.

(2) The cash paid at close represents the gross contractual amount paid. The Company paid the additional $12.5 million in cash in third quarter 2017. Net of cash acquired from these businesses and for cash flow reporting purposes, the Company paid a total of $2.63 billion in cash.

(3) The Company borrowed a total of approximately $2.8 billion in conjunction with the CEB acquisition (see Note 7 — Debt for additional information).

(4) Consists of the fair value of (i) Gartner common stock issued (see Note 7 — Stockholders' Equity for additional information) and (ii) stock-based compensation replacement awards.

(5) The Company may also be required to pay up to an additional $20.8 million in cash for L2 which is contingent on the achievement of certain employment conditions by several key employees. This amount is being recognized as compensation expense over approximately three years.

Summary of the allocation of the purchase price to the fair value of the assets and liabilities assumed

The following table summarizes the preliminary allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the acquisitions of L2 and CEB (in thousands):

	CEB (3)		L2 (4)		Total
Assets:
Cash	$	194,706	$	4,852	$	199,558
Fees receivable	175,440		8,277		183,717
Prepaid expenses and other current assets	53,610		1,167		54,777
Property, equipment and leasehold improvements	51,399		663		52,062
Goodwill (1)	2,349,589		108,202		2,457,791
Finite-lived intangible assets (2)	1,584,300		15,890		1,600,190
Other assets	66,818		13,067		79,885
Total assets	$	4,475,862	$	152,118	$	4,627,980
Liabilities:
Accounts payable and accrued liabilities	$	142,134	$	3,050	$	145,184
Deferred revenues (current)	246,472		13,200		259,672
Other liabilities	568,427		1,669		570,096
Total liabilities	$	957,033	$	17,919	$	974,952
Net assets acquired	$	3,518,829	$	134,199	$	3,653,028

(1) The Company believes the goodwill resulting from the acquisitions is supportable based on anticipated synergies. For CEB, among the factors contributing to the anticipated synergies are a broader market presence, expanded product offerings and market opportunities, and an acceleration of CEB's growth by leveraging Gartner's global infrastructure and best practices in sales productivity and other areas. None of the recorded goodwill is expected to be deductible for tax purposes. The Company recorded certain measurement period adjustments to the CEB preliminary purchase price allocation during 2017, primarily related to tenant improvement incentives and tax liabilities. These adjustments resulted in a net increase to recorded goodwill of approximately $32.0 million. As of December 31, 2017, the allocation of the purchase price for the L2 and CEB acquisitions are preliminary with respect to certain tax matters and contingencies. The Company will resolve these remaining matters and complete the allocation of the purchase price by the end of the accounting measurement period for the respective acquisition. 

(2) All of the acquired intangible assets are finite-lived. The determination of the fair value of the finite-lived intangible assets required management judgment and the consideration of a number of factors. In determining the fair values, management primarily relied on income valuation methodologies, in particular discounted cash flow models. The use of discounted cash flow models required the use of estimates, significant among them projected cash flows related to the particular asset; the useful lives of the particular assets; the selection of royalty and discount rates used in the models; and certain published industry benchmark data. In establishing the estimated useful lives of the finite-lived intangible assets, the Company relied on both internally-generated data for similar assets as well as certain published industry benchmark data. We believe the values we have assigned to the finite-lived intangible assets are both reasonable and supportable.

(3) The Company's financial statements include the operating results of CEB beginning on April 5, 2017, the date of acquisition. CEB's operating results and the related goodwill are being reported as part of the Company's Research, Events, and Talent Assessment & Other segments. Had the Company acquired CEB in prior periods, the impact to the Company's operating results would have been material, and as a result the following pro forma consolidated financial information is presented as if CEB had been acquired by the Company on January 1, 2016 (in thousands, except per share amounts):

	Twelve Months Ended
	December 31,
	2017		2016
Pro forma total revenue	$	3,726,470	$	3,183,070
Pro forma net income (loss)	150,167		(241,423		)
Pro forma basic and diluted income (loss) per share	$	1.66	$	(2.68	)

The pro forma results have been prepared in accordance with U.S. GAAP and include the following pro forma adjustments:

(a) An increase in interest expense and amortization of debt issuance costs related to the financing of the CEB acquisition. Note 5 — Debt provides further information regarding the Company's borrowings related to the CEB acquisition;

(b) A change in revenue as a result of the required fair value adjustment to deferred revenue; and

(c) An adjustment for additional depreciation and amortization expense as a result of the preliminary purchase price allocation for finite-lived intangible assets and property, equipment, and leasehold improvements.

(4) The Company's financial statements include the operating results of L2 beginning on March 9, 2017, the acquisition date. L2's operating results were not material to the Company's consolidated operating and segment results for 2017. Had the Company acquired L2 in prior periods, the impact to the Company's operating results would not have been material, and as a result pro forma financial information for L2 for prior periods has not been presented. L2's operating results and the related goodwill are being reported as part of the Company's Research segment.

Schedule of pro forma financial information

Had the Company acquired CEB in prior periods, the impact to the Company's operating results would have been material, and as a result the following pro forma consolidated financial information is presented as if CEB had been acquired by the Company on January 1, 2016 (in thousands, except per share amounts):

	Twelve Months Ended
	December 31,
	2017		2016
Pro forma total revenue	$	3,726,470	$	3,183,070
Pro forma net income (loss)	150,167		(241,423		)
Pro forma basic and diluted income (loss) per share	$	1.66	$	(2.68	)

Summary of amounts related to new building

The following table presents a summary of the activity related to this space for the year ended December 31, 2017 (in thousands):

Liability balance at December 31, 2016	$	—
Charges and adjustments	13,087
Payments	(126		)
Liability balance at December 31, 2017	$	12,961

Principal components of held-for-sale assets and liabilities

The principal components of the held-for-sale assets and liabilities at December 31, 2017 for this business are summarized in the table below (in thousands):

Cash and cash equivalents	$	10,000
Fees receivable, net	50,928
Goodwill	212,994
Intangible assets, net	250,472
Other assets, including property, equipment and leasehold improvements, net	18,571
Total assets held-for-sale	$	542,965
Accounts payable and accrued liabilities	$	32,388
Deferred revenues	61,450
Deferred tax liabilities	47,404
Other liabilities	4,603
Total liabilities held-for-sale	$	145,845