v3.26.1
Acquisition
 9 Months Ended
May 31, 2026
Business Combination [Abstract]  
Acquisition

Note 3. Acquisition

As of August 31, 2024, Talent Mobility, LLC, a wholly-owned subsidiary of Phoenix Education Operating Corp. (“PEOC”), had a minority ownership interest in Empath, Inc. (“Empath”). Empath provides clients with a company-wide skills inventory for its employees through machine learning-based skills inference. In the first quarter of fiscal year 2025, PEOC acquired a controlling interest in Empath pursuant to an Agreement and Plan of Merger, by merging Talent Mobility, LLC with Empath, with Empath surviving as a subsidiary of PEOC. Empath was subsequently renamed “Talent Mobility, Inc.” PEOC paid approximately $2 million, net of cash acquired, to facilitate this merger and did not incur material transaction costs.

We accounted for this merger as a business combination and allocated the purchase price to the assets acquired and liabilities assumed at fair value as summarized below:

 

 

 

 

($ in thousands)

 

 

 

Cash

 

$

2,418

 

Finite-lived intangibles - Technology (3 year useful life)

 

 

7,254

 

Goodwill

 

 

3,732

 

Deferred income taxes

 

 

(1,706

)

Other

 

 

(99

)

Total assets acquired and liabilities assumed, net

 

 

11,599

 

Less: Fair value of noncontrolling interests

 

 

(4,147

)

Total fair value of consideration transferred

 

 

7,452

 

Less: Cash acquired

 

 

(2,418

)

Less: Fair value of equity method investment

 

 

(2,452

)

Less: Note forgiven

 

 

(600

)

Cash paid for acquisition, net of cash acquired

 

$

1,982

 

We determined fair value using the following assumptions, the majority of which include significant unobservable inputs (Level 3), that we believe reasonable market participants would use while employing the concept of highest and best use of the respective items:

•
Intangibles – We valued the technology primarily using the replacement cost approach. We determined this acquired intangible asset is finite-lived and we are amortizing the asset on a straight-line basis over three years, which we believe reflects the pattern in which the economic benefits of the asset are expected to be consumed.
•
Other – The carrying value of all other assets acquired and liabilities assumed approximated their fair value at the time of acquisition.
•
Noncontrolling interests – We estimated the fair value of the noncontrolling interests principally as the noncontrolling ownership percentage of the implied fair value of the acquired entity, and applied a discount for lack of control.

The goodwill resulting from the merger is principally attributable to the future earnings potential associated with customer enrollment growth and other intangibles that do not qualify for separate recognition, such as the assembled workforce. The operating results of Empath are included in our consolidated financial statements from the date of acquisition and its results are not material to our consolidated results of operations. Pro forma financial information is not presented as Empath’s results were not material to our condensed consolidated statements of income.