10-Q
TTEC HOLDINGS, INC. filed this Form 10-Q on 11/07/2018
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Table of Contents

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(2)ACQUISITIONS AND DIVESTITURES

Strategic Communications Services

On April 30, 2018, the Company acquired all of the outstanding equity securities of Strategic Communications Services, Ltd (“SCS”). SCS provides services as a system integrator for multichannel contact center platforms, including CISCO. The Company offers in-house, managed and outsourced network, information, communications and contact center services to leading brands throughout Europe. This business will be integrated into the Company’s CTS segment.

Total cash paid at acquisition was £4.4 million ($6.1 million USD) (inclusive of $4.5 million related to cash balances). The purchase price was subject to customary representations and warranties, indemnities, and a net working capital adjustment. The agreement includes potential earn-out payments over the next three years with a maximum value of £3.0 million ($4.1 million USD) contingent on EBITDA performance over the next three years. The Company finalized the working capital adjustment for an additional $210 thousand during the third quarter of 2018 which was paid in October 2018.

The fair value of the contingent consideration has been measured based on significant inputs not observable in the market (Level 3 inputs). Key assumptions include a discount rate of 4.7% and expected future value of payments of $2.9 million. The $2.9 million of expected future payments was calculated using probability weighted EBITDA assessment with the highest probability associated with SCS achieving the targeted EBITDA for each earn-out year. As of the acquisition date, the fair value of the contingent consideration was $2.7 million. As of September 30, 2018, the fair value of the contingent consideration was $2.8 million, of which $0.7 million and $2.1 million were included in Other accrued expenses and Other long-term liabilities in the accompanying Consolidated Balance Sheets, respectively.

The following summarizes the preliminary estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands):

 

 

 

 

 

 

    

Preliminary

 

 

 

Estimate of

 

 

 

Acquisition Date

 

 

 

Fair Value

 

Cash

 

$

4,530

 

Accounts receivable, net

 

 

985

 

Prepaid expenses

 

 

39

 

Customer relationships

 

 

3,619

 

Goodwill

 

 

1,462

 

 

 

$

10,635

 

 

 

 

 

 

Accounts payable

 

$

216

 

Accrued employee compensation and benefits

 

 

27

 

Accrued expenses

 

 

252

 

Deferred tax liabilities

 

 

629

 

 

 

$

1,124

 

 

 

 

 

 

Total purchase price

 

$

9,511

 

 

The estimates of fair value of identifiable assets acquired and liabilities assumed are preliminary, pending finalization of a valuation and tax returns, thus are subject to revisions that may result in adjustments to the values presented above.

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