v3.26.1
Acquisitions and Business Combinations
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisitions and Business Combinations Acquisitions and Business Combinations
During the three and six months ended June 30, 2026, the Company completed the acquisitions of tax firms in Ireland and New Zealand, a tax firm and a consulting firm in Nigeria, and a tax and law firm and an accounting firm in Uruguay. These acquisitions are not individually material to the Company's consolidated financial statements.
The Company applied the acquisition method of accounting in accordance with ASC 805 and recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess purchase consideration recorded to goodwill or bargain purchase gain.
The purchase price allocation below is based upon provisional information and is subject to revision during the measurement period (up to one year from the acquisition date) as additional information concerning valuations is obtained. During the measurement period, as the Company obtains new information regarding facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities, the Company will accordingly revise the provisional purchase price allocation.

The aggregate purchase price for these acquisitions was $12.2 million, made up of $5.2 million in cash paid at closing including the settlement of debt, $0.5 million for the settlement of pre-existing arrangements and $6.4 million in deferred consideration, which will be paid in cash within 4 months of closing. The estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition dates. The Company expects to finalize the valuations and complete the purchase price allocations as soon as practicable but no later than one year from the acquisition dates.
The following table presents the preliminary allocation of the aggregate purchase price of these acquisitions (in thousands):
Preliminary Allocation
Purchase price:
Cash paid including the settlement of debt $ 5,235 
Settlement of pre-existing arrangements 537 
Fair value of deferred consideration 6,421 
Total purchase price $ 12,193 
Net assets acquired:
Cash and cash equivalents $ 6,000 
Accounts receivable, net 7,001 
Other current assets 992 
Property and equipment, net 1,083 
Operating lease right-of-use assets 2,808 
Other noncurrent assets 4 
Customer relationships 3,535 
Liabilities assumed, current (7,385)
Operating lease liabilities, current (339)
Operating lease liabilities, noncurrent (2,371)
Bargain purchase gain (1,383)
Goodwill
 2,248 
Total net assets acquired $ 12,193 
As a result of these acquisitions, the Company recognized $2.2 million of goodwill, $3.5 million of customer relationships and a bargain purchase gain of $1.4 million. Goodwill represents the synergies and economies of scale expected from expanding into key developed and high-growth markets. Goodwill is not expected to be deductible for tax purposes. Customer relationships have an estimated useful life of 10 years. Pre-existing debt as part of the acquisitions was extinguished at closing and included within the preliminary allocation of the aggregate purchase price. As a result of comparing the purchase price to the fair value of the assets acquired and liabilities assumed, an initial $1.4 million bargain purchase gain from the Ireland firm and Nigeria consulting firm was recognized. The bargain purchase gains are primarily due to negotiating economic consideration in the form of post-combination compensation arrangements with substantive service conditions.
In connection with the acquisitions, the Company entered into several service-based payment arrangements, under which the selling shareholders are eligible to receive future payments. These arrangements include contingent annual cash payments equal to 100% of the annual net profit generated by the acquired entity for each of the five consecutive twelve-month periods following the acquisition date, recognized in compensation expense in the relevant periods, the granting of 822,214 restricted Class A (see Note 12 "Restricted Class A Common Stock") and cash payments based on the net working capital of the acquired entities of $5.4 million, recognized as compensation expense over a three-year service period. Stock-based compensation expense to be recognized over a five-year service period is $24.0 million. Service-based payments of $6.9 million to be paid sixteen months after the close of the acquisitions will be recognized as compensation expense over the related period. Because these service-based payments requiring the selling shareholders' continued employment with the Company, the arrangements are accounted for as post-combination compensation expense rather than as part of the initial purchase consideration and included in cost of services in the consolidated statements of operations. In the consolidated balance sheet, cash payments are recognized in other liabilities and share-based payments are recognized in additional paid-in capital.
The results of operations of these acquisitions are included in the Company's unaudited condensed consolidated statements of operations from their respective dates of acquisition and were not material.
Pro forma results of operations for the acquisitions have not been presented because they are not material to the Company's unaudited condensed consolidated financial statements.