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Acquisitions
 12 Months Ended
Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract]  
Acquisitions Acquisitions
Avast Family Safety Mobile Business
On April 16, 2021, the Company acquired the Family Safety Mobile Business from Avast pursuant to a Membership Interest and Asset Purchase Agreement (the “Purchase Agreement”).
The following table summarizes the consideration paid for the Family Safety Mobile Business in 2021 (in thousands):
Fair value of assets acquired$74,818 
Fair value of liabilities assumed2,085 
Total purchase price$72,733 
Components of purchase price:
Cash$63,216 
Common stock8,381 
Contingent consideration1,136 
Total purchase price$72,733 
The Company’s allocation of the purchase price is summarized as follows (in thousands):
Assets:
Cash$6,351 
Accounts receivable6,225 
Prepaid expenses513 
Fixed assets921 
Intangible assets38,033 
Goodwill22,775 
Total assets$74,818 
Liabilities:
Accounts payable$392 
Accrued payroll and benefits1,662 
Accrued expenses31 
Total liabilities$2,085 
Total purchase price$72,733 
The Purchase Agreement included an earn-out provision that provided for additional future payments to Avast aggregating up to $14.0 million. Approximately $1.1 million of the earn-out consideration was included in the original purchase price allocation and valued based upon a percentage of the projected revenue stream from a specified contract utilizing a discounted cash flow method. During the third quarter of 2021, the Company recorded the remaining $12.9 million as a charge to operating expenses due to a contract extension becoming probable with a given customer designated in the earn-out provision, resulting in an increase in the contingent consideration due to Avast. In November 2021, the remainder of the earn-out was paid in full and no further earn-out payments will be due in the future.
The goodwill recognized was attributable primarily to expected synergies and the assembled workforce of the Family Safety Mobile Business. The goodwill is deductible for income tax purposes.
The purpose of the Family Safety Mobile Business acquisition was to acquire a portfolio of mobile family safety services including location features, content filtering and screen time management, cementing Smith Micro as a leader in delivering mobile family safety software solutions to wireless carriers and to further expand Smith Micro’s white-label digital safety solutions, positioning the Company as a leading family safety software-as-a-service provider globally while adding critical headcount in the U.S. and Europe.