LOGM 2017 Annual Report

pleted the acquisition of Marvasol, Inc., d/b/a “LastPass,” or LastPass, on October 15, 2015. The results of oper- ations of these acquired businesses have been included in the Company’s consolidated financial statements beginning on their respective acquisition dates. These acquisitions have been accounted for as business combinations. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the respective acquisition date. The fair values of intangible assets were based on valuations using an income approach, with estimates and assumptions provided by management of the acquired companies and the Company. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. In the years ended December 31, 2015, 2016 and 2017, acquisition-related costs were $6.4 million, $25.1 million and $59.8 million, respectively, including $5.6 million, $8.2 million and $16.6 million, respectively, of con- tingent retention-based bonus expense related to the Company’s acquisitions, which are typically earned over the first two years following the acquisition. Included in the years ended December 31, 2016 and 2017 is $16.2 mil- lion and $46.0 million, respectively, of acquisition-related costs associated with the Merger. 2017 Acquisitions Nanorep Technologies Ltd. On July 31, 2017, the Company, through its wholly-owned Hungarian subsidiary, acquired all of the outstanding equity interests in Nanorep, an Israeli provider of artificial intelligence, chatbot and virtual assistant services, for $43.2 million, net of cash acquired. Additionally, the Company expects to pay up to $5 million in cash in the future to certain employees of Nanorep contingent upon their continued service over the two-year period follow- ing the closing of the acquisition and, in some cases, the achievement of specified performance conditions. At the time of the acquisition, Nanorep had approximately 55 employees and annualized revenue of approximately $5 million. The operating results of Nanorep, which have been included in the Company’s results since the date of the acquisition are not material. Accordingly, pro forma financial information for the business combination has not been presented. The acquisition is being accounted for under the acquisition method of accounting. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The determination of the fair value of assets acquired and liabilities assumed has been recognized based on management’s estimates and assumptions using the information about facts and circumstances that existed at the acquisition date. The Company finalized the allocation of purchase price in the fourth quarter of 2017 and recorded a $0.1 million purchase price adjustment received in the fourth quarter of 2017 for the final agreed net working capital adjustment. 68