HomeAway’s Q3 2014 report disclosed more details about the agreement reached in the acquisition of mobile app provider Glad To Have You, including the purchase price of approximately $16,791,000
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Excerpt from HomeAway Inc. for the Quarterly Report ended March 31, 2014
In March 2014, the Company acquired Glad To Have You, Inc. (“Glad To Have You”), a United States company that is the creator of a mobile guest management solution for the vacation rental industry, for cash consideration of approximately $16,791,000. The direct acquisition costs incurred by the Company were not significant to the Company’s operating results, and all such costs were expensed as incurred and included in general and administrative expenses in the consolidated statement of operations.
Of the total consideration paid, $250,000 of the cash consideration was deposited in escrow as security for the benefit of the Company against breaches of representations and warranties, covenants and certain other expressly enumerated matters by the sellers. The escrow funds not used to satisfy such seller obligations will be released to the sellers two business days following the first anniversary date of the acquisition. In addition, $250,000 of the total cash consideration was deposited in escrow as security and pending final net working capital related purchase price adjustments. These amounts are expected to be paid within 120 days after acquisition.
The acquired goodwill primarily represents synergies associated with adding Glad To Have You’s mobile applications to the Company’s marketplace of websites to provide property owners and managers with an additional way to manage and communicate with guests during their stay. Goodwill is not deductible for tax purposes. The acquired trade name has an estimated useful life of 10 years from the date of acquisition, the developed technology has an estimated useful life of 5 years from the date of acquisition and the customer relationships have an estimated useful life of 10 years from the date of acquisition. Non-compete agreements have an estimated useful life of 3 years. The total weighted average amortization period for the intangibles acquired is 7 years.
The results of Glad To Have You have been included in the Company’s consolidated results since the acquisition date in March 2014. Pro forma results of operations related to this acquisition have not been presented since Glad To Have You’s operating results up to the date of acquisition were not material to the Company’s consolidated financial statements.
The following table summarizes the Company’s acquisition during the three months ended March 31, 2014, with amounts shown below as fair values at the acquisition date (in thousands):
|
Glad to Have You, Inc. |
||||
| Net tangible assets (liabilities) acquired | ||||
| Cash | $ |
25 |
||
| Deferred revenue |
(65 |
) | ||
| Other |
17 |
|||
|
|
|
|||
| Total net tangible assets (liabilities) acquired |
(23 |
) | ||
| Deferred tax liabilities |
(1,653 |
) | ||
| Trade name |
1,177 |
|||
| Developed technology |
3,760 |
|||
| Customer relationships |
1,643 |
|||
| Goodwill |
11,647 |
|||
| Non-competition agreements |
240 |
|||
|
|
|
|||
| Purchase price |
16,791 |
|||
| Less: Cash acquired |
(25 |
) | ||
|
|
|
|||
| Net purchase price | $ |
16,766 |
||
|
|
|
|||
Tangible net assets (liabilities) were valued at their respective carrying amounts, which the Company believes approximate their current fair values at the respective acquisition dates.
The valuation of identifiable intangible assets acquired reflects management’s estimates based on, among other factors, use of established valuation methods. The value of the acquired trade names was determined using a relief from royalty method. Developed technology was valued on a combination of the income and market approach. Customer relationships were valued by projecting the estimated cash flow from the Company’s existing customer relationships. Non-competition agreements have been valued based on the present value of estimated future cash flows with and without this asset. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method and the estimated useful lives of three to ten years. The straight-line method of amortization represents the Company’s best estimate of the distribution of the economic value of the identifiable intangible assets. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired.
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