Envestnet, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Business Acquisitions

Business Acquisitions

3 Months Ended

Mar. 31, 2019

Acquisition of private company

On January 2, 2019 pursuant to an agreement and plan of merger dated as of January 2, 2019 between Envestnet and a private company that provides conversational artificial intelligence tools and applications to financial services firms, the private company merged into Yodlee Inc. (the “Private Company Acquisition”). The completion of the Private Company Acquisition on January 2, 2019 followed the receipt of all necessary and regulatory approvals and third party consents. In connection with the Private Company Acquisition, the Company incurred consideration of approximately $25,063, including estimated contingent consideration of $7,580, for all the outstanding shares of the private company, subject to certain closing and post-closing adjustments. The private company improves the way Financial Service Providers (“FSPs”) can interact with their customers, and supports these FSPs to better engage, support and assist their consumers leveraging this latest wave of customer-centric capabilities.

The preliminary consideration transferred in the acquisition was as follows:



	Preliminary Estimate
Upfront cash consideration	$	11,173
Purchase consideration liability	6,240
Contingent liability	7,580
Working capital adjustment	70
Total	$	25,063

The estimated fair values of deferred income taxes, identifiable intangible assets, and goodwill balances are provisional and based on the information that was available as of the acquisition date. The estimated fair values of these provisional items are based on certain valuation and other studies and are in progress and not yet at the point where there is sufficient information for a definitive measurement. The Company believes the preliminary information proves a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair values reflected are subject to change and such changes could be significant. The Company expects to finalize the valuation of working capital and goodwill balances and complete the acquisition accounting as soon as practicable but no later than January 2, 2020.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:



	Preliminary Estimate
Total tangible assets acquired	$	144
Total liabilities assumed	(629		)
Identifiable intangible assets	4,100
Goodwill	21,448
Total net assets acquired	$	25,063

The goodwill arising from the acquisition represents the expected synergistic benefits of the transaction, primarily related to the knowledge and experience of the workforce in place. The goodwill is not deductible for income tax purposes.

A summary of estimated intangible assets acquired, estimated useful lives and amortization method is as follows:



	Amount		Estimated Useful Life in Years	Amortization Method
Proprietary technology	$	4,100	4	Straight-line

For the three months ended March 31, 2019, acquisition related costs for the private company totaled $90, and are included in general and administration expenses. The Company may incur additional acquisition related costs over the remainder of 2019.

The results of the private company's operations are included in the condensed consolidated statements of operations beginning January 2, 2019 and are not considered material to the Company’s results of operations. As such, no pro forma information is presented for the three months ended March 31, 2018.