Business Combinations

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

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, and 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 earn-out 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, 2021, 2020 and 2019, these aggregate contingent accrued earn-out business acquisition consideration liabilities, were reduced by $0, $3.1 million, and $16.5 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 reductions to general and administrative expenses as reported on the consolidated statements of income. As of December 31, 2021, the total of these contingent liabilities was $2.6 million, which was included in long-term liabilities in the Company's consolidated balance sheet. As of December 31, 2020, there was no outstanding contingent earn-out liability in the Company's consolidated balance sheet.

During the year ended December 31, 2021 the Company did not make any business acquisitions.

During the year ended December 31, 2020 the Company completed two business acquisitions, as follows:

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 was finalized during the second quarter of 2021.

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 was finalized during the third quarter of 2021.

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 acquisitions:


Company acquired	Date acquired	Goodwill		Intangibles Assets		Contingent Earn-Out Provision
		(In thousands)





Trimax	May-20	$	9,930	$	873	$	2,560
AssureEdge	Oct-20	3,192		797		—
Total for 2020 acquisitions		$	13,122	$	1,670	$	2,560

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:


	2020
(In thousands)	Acquisitions
Fair value of total consideration transferred
Cash	$	13,774
Consideration payable	1,568
Contingent earn-out consideration arrangement (net)	2,560

Total consideration transferred	17,902

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

Recognition of noncontrolling interest of joint ventures	1,350
Total equity components recorded	1,350

Total consideration transferred and equity components recorded	$	19,252

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


Other current assets	2,812
Property, plant, and equipment	3,451
Other long-term assets	103
Intangible assets, definite-lived	1,670



Current and other liabilities, net of consideration transferred	(3,264)
Net assets acquired, excludes goodwill	6,130

Goodwill	13,122

Total net assets acquired	$	19,252

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



	2020 Acquisitions
			Weighted Average
Intangible asset category	Fair Value		Useful Life
	(In thousands)		(In years)
Customer contracts and related customer relationships*	$	1,203	8.2
Developed technology*	467		5.0






Total acquired intangible assets	$	1,670	7.3
*Purchase accounting adjustments during 2021 related to the 2020 acquisitions

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, 2022	$	9,695
For the year ended December 31, 2023	7,692
For the year ended December 31, 2024	5,934
For the year ended December 31, 2025	4,530
For the year ended December 31, 2026	3,771
Thereafter	15,173

	$	46,795

The Company recorded $10.4 million, $9.5 million, and $10.2 million of amortization expense related to acquired intangible assets for the years ended December 31, 2021, 2020, and 2019, respectively.