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Acquisitions and Divestiture (Tables)
12 Months Ended
Dec. 31, 2018
Mergers, Acquisitions And Dispositions Disclosures [Abstract]  
Summary of amounts related to new building
The table below presents a summary of the activity related to our accrual for exit costs at all of our facilities for the years ended December 31, 2018 and 2017 (in thousands). There was no such activity in 2016.
 
2018
 
2017
Liability balance at beginning of the period
$
12,961

 
$

Charges and adjustments, net (1)
69,790

 
13,087

Payments, net of $2,515 in sublease rent during 2018
(26,087
)
 
(126
)
Liability balance at end of the period (2)
$
56,664

 
$
12,961

 
(1)
During 2018, the Company recognized $7.5 million of expense for changes in the original estimates of its exit cost obligations. The corresponding amount for 2017 was a benefit of $10.1 million.
(2)
In total, we estimate that the Company will make net cash payments of approximately $90.6 million for exit costs in connection with the activities described herein. Through December 31, 2018, in the aggregate, we have expensed $82.9 million and had net cash outlays of $26.2 million related to such activities.
Schedule of aggregate purchase price for acquisitions
The following table summarizes the aggregate consideration paid for these acquisitions during 2017 (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
$
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 and for cash flow reporting purposes, the Company paid a total of approximately $2.64 billion in cash for acquisitions in 2017.
(3)
The Company borrowed a total of approximately $2.8 billion in conjunction with the CEB acquisition (see Note 5 — 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.
Summary of the allocation of the purchase price to the fair value of the assets and liabilities assumed
The following table summarizes the 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. 
(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, Conferences and 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.
(c) An adjustment for additional depreciation and amortization expense as a result of the 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
)