Business Acquisitions

12 Months Ended

Dec. 31, 2020

The Company’s business acquisitions are accounted for under the purchase method of accounting in accordance with ASC 805 ("Business Combinations"). Accordingly, the consideration paid by the Company for the businesses it purchases is allocated to the tangible and intangible assets and liabilities acquired based upon their estimated fair values as of the date of the acquisition. The excess of the purchase price over the estimated fair values of assets acquired and liabilities assumed is recorded as goodwill. Recognized goodwill pertains in part to the value of the expected synergies to be derived from combining the operations of the businesses we acquire including the value of the acquired workforce. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record significant adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in our consolidated statements of income.

The Company's practice is to immediately integrate all functions including infrastructure, sales and marketing, administration, product development after a business acquisition is consummated, so as to ensure that synergistic efficiencies are maximized, redundancies eliminated, and to leverage cross-selling opportunities. Furthermore, the Company centralizes certain key functions such as information technology, marketing, sales, human resources, finance, and other general administrative functions after an acquisition, in order to realize cost efficiencies. By executing this integration strategy, it becomes neither practical nor feasible to accurately and separately track and disclose the earnings from the business combinations we have executed after they have been acquired.

A significant component of the purchase price consideration for many of the Company's business acquisitions is a potential future cash earnout based on reaching certain specified future revenue targets. The terms for the contingent earn-out payments in most of the Company's business acquisitions typically address revenues achieved by the acquired entity over a one, two, and/or three year period subsequent to the effective date of their acquisition by Ebix. These terms typically establish a minimum threshold revenue target with achievement of revenues recognized over that target being awarded in the form of a specified cash earn-out payment. The Company applies these terms in its calculation and determination of the fair value of contingent earn-out liabilities for purchased businesses as part of the related valuation and purchase price allocation exercise for the corresponding acquired assets and liabilities. The Company recognizes these potential obligations as contingent liabilities as reported on its Consolidated Balance Sheets. As discussed in more detail in Note 1, these contingent consideration liabilities are recorded at fair value on the acquisition date and are remeasured quarterly based on the then assessed fair value and adjusted if necessary. During each of the years ending December 31, 2020, 2019 and 2018, these aggregate contingent accrued earn-out business acquisition consideration liabilities, were reduced by $3.1 million, $16.5 million, and $1.4 million, respectively, due to remeasurements as based on the then assessed fair value and changes in the amount and timing of anticipated future revenue levels. These reductions to the contingent accrued earn-out liabilities resulted in corresponding reduction to general and administrative expenses as reported on the Consolidated Statements of Income. As of December 31, 2020, there were no outstanding contingent earn-out liability in the Company's Consolidated Balance Sheet. As of December 31, 2019, the total of these contingent liabilities was $10.1 million, of which $1.5 million was reported in long-term liabilities and $8.6 million was included in current liabilities in the Company's Consolidated Balance Sheet.

2020 Acquisitions

Trimax- Effective May 4, 2020, Ebix acquired from bankruptcy India-based Trimax, which provides IT and integration services to state-owned transport corporations, operates data centers, and is an IT infrastructure solution provider, for approximately $9.9 million of upfront consideration. Additionally, Ebix issued preferred shares in Trimax to the selling shareholders that can be sold five years from the closing of the acquisition based on an independent valuation performed by a Big 4 valuation firm. The maximum potential value of the preferred shares is approximately $9.9 million. The valuation and purchase price allocation remains preliminary and will be finalized as soon as practicable but in no event longer than one year from the effective date of this transaction.

AssureEdge- Effective October 1, 2020 the Company acquired a 70% interest in AssureEdge Global Services (“AssureEdge”) for a total purchase price of approximately $5.0 million, including net working capital acquired. AssureEdge is a pan-India based business process outsourcing ("BPO") company, with a variety of BPO offerings via six contact centers across the country. It serves a number of industries and clients that have cross-selling value for EbixCash services. The valuation and purchase price allocation remains preliminary and will be finalized as soon as practicable but in no event longer than one year from the effective date of this transaction.

2019 Acquisitions

Wallstreet Canada- Effective August 23, 2019, Ebix acquired Canada based Wallstreet Canada, a foreign exchange and outward remittance service provider for approximately $2.1 million inclusive of net acquired working capital.

Essel Forex- Effective January 1, 2019, Ebix acquired the assets of India based Essel Forex, for approximately $8.7 million, plus possible future contingent earn-out payments of up to $721 thousand based on earned revenues. Ebix funded the entire transaction in cash using its internal cash reserves. Essel Forex is a provider of foreign exchange services in India, with a wide spectrum of related products including sales of all major currencies, travelers’ checks, demand drafts, remittances, money transfers and prepaid cards primarily for corporate clients.

Zillious- Effective January 1, 2019, Ebix acquired an 80% controlling stake in India based Zillious for $10.1 million plus possible future contingent earn-out payments of up to $2.2 million based on agreed milestones in the acquisition agreement. Zillious is an on-demand SaaS travel technology solution in the corporate travel segment in India.

The following table summarizes the recognized intangible assets, goodwill and earn-out provisions, as a result of the cumulative valuation and purchase price allocations on effective date of acquisition, for the 2020 and 2019 acquisitions:


Company acquired	Date acquired	Goodwill		Intangibles Assets		Contingent Earn-Out Provision
		(In thousands)
Essel Forex	Jan-19	8,372		1,163		407
Zillious	Jan-19	9,489		1,875		1,515
Wallstreet Canada	Aug-19	71		—		—
Total for 2019 acquisitions		$	17,932	$	3,038	$	1,922

Trimax*	May-20	8,243		—		—
AssureEdge*	Oct-20	3,678		—		—
Total for 2020 acquisitions		$	11,921	$	—	$	—

*The valuation and purchase price allocation remains preliminary and will be finalized as soon as practicable but in no event longer than one year from the effective date of this transaction.

The following table summarizes the fair value of the consideration transferred, net assets acquired and liabilities assumed, as of the acquisition date, for acquisitions closed during 2020 and 2019:



(In thousands)	2020		2019
Fair value of total consideration transferred
Cash	$	13,774	$	105,391
Consideration payable	1,827		—
Contingent earn-out consideration arrangement (net)	—		1,922

Total consideration transferred	15,601		107,313

Fair value of equity components recorded (not part of consideration)

Recognition of noncontrolling interest of joint ventures	1,350		(10,258)
Total equity components recorded	1,350		(10,258)

Total consideration transferred and equity components recorded	$	16,951	$	97,055

Fair value of assets acquired and liabilities assumed
Cash, net of adjustment	$	1,358	$	(75)


Other current assets	2,812		5,175
Property, plant, and equipment	4,021		231
Other long term assets	103		3,023
Intangible assets, definite lived	—		6,296

Capitalized software development costs	—		—
Deferred tax liability	—		12
Current and other liabilities, net of consideration transferred	(3,264)		63,721
Net assets acquired, excludes goodwill	5,030		78,383

Goodwill	11,921		18,672

Total net assets acquired	$	16,951	$	97,055

The following table summarizes the separately identified intangible assets acquired as a result of the acquisitions that occurred during 2020 and 2019:


	December 31,
	2020			2019
			Weighted Average			Weighted Average
Intangible asset category	Fair Value		Useful Life	Fair Value		Useful Life
	(In thousands)		(In years)	(In thousands)		(In years)
Customer relationships	$	—	0.0	$	3,042	7.5
Developed technology	—		0.0	851		7.0
Agent network	—		0.0	582		10.2
Airport contracts	—		0.0	—		0.0
Store networks	—		0.0	—		0.0
Brand	—		0.0	78		5.0
Branch network	—		0.0	1,743		10.0
Purchase accounting adjustments for prior year acquisitions	—		0.0	—		0.0
Total acquired intangible assets	$	—	0.0	$	6,296	8.0

Estimated aggregate future amortization expense for the intangible assets recorded as part of the business acquisitions described above and all other prior acquisitions is as follows:


Future Amortization Expenses (In thousands):
For the year ended December 31, 2021	$	9,359
For the year ended December 31, 2022	8,967
For the year ended December 31, 2023	6,942
For the year ended December 31, 2024	5,155
For the year ended December 31, 2025	3,835
Thereafter	16,622

	$	50,880

The Company recorded $9.5 million, $10.2 million, and $7.5 million of amortization expense related to acquired intangible assets for the years ended December 31, 2020, 2019, and 2018, respectively.