4. Business Combinations

Meetrics GmbH

On August 31, 2021, the Company acquired all of the outstanding stock of Meetrics. Meetrics was founded in 2008 in Berlin, Germany and is a European-based ad verification provider – offering comprehensive media quality measurement solutions across viewability, fraud, brand safety and suitability. The aggregate net cash purchase price was $24.3 million. This acquisition expands DoubleVerify’s international presence as substantially all of Meetrics’ customer base and business operations are based in Europe.

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The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:

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The Company’s purchase price allocation is preliminary as it relates to the determination of accruals that may be necessary for certain direct and indirect taxes and final working capital adjustments, which the Company is still evaluating.

The acquired intangible assets of Meetrics will be amortized over their estimated useful lives. Accordingly, customer relationships will be amortized over fourteen years, developed technology will be amortized over four years, non-compete agreements will be amortized over two years, and trademarks will be amortized over one year. The total weighted-average useful life of the acquired intangible assets is 11.5 years. The Company recognized a deferred tax liability of $1.2 million in relation to the intangible assets acquired.

The goodwill and identified intangible assets are not deductible for tax purposes. The Company incurred acquisition-related transaction costs of $0.9 million included in General and administrative expenses in the Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2021.

The goodwill associated with Meetrics includes the acquired assembled work force, the value associated with the opportunity to leverage the work force to continue to develop the future generations of verification technology assets, as well as the ability to grow the Company through adding additional customer relationships or new solutions in the future.

The preliminary allocations of the purchase price for Meetrics are subject to revisions as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The revisions may have a significant impact on the accompanying consolidated financial statements. The allocations of the purchase price will be finalized once all information is obtained and assessed, not to exceed one year from the acquisition date.

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The acquisition of Meetrics was immaterial to the Company's Consolidated Financial Statements for the years ended December 31, 2021 and 2020, and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.

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OpenSlate

On November 22, 2021, the Company acquired all of the outstanding stock of OpenSlate. OpenSlate is a leading independent pre-campaign contextual targeting platform for social video and CTV. OpenSlate’s technology provides insight into the nature and quality of ad-supported content on large, video-driven social platforms, such as Facebook, TikTok and YouTube.

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The following table summarizes the components of purchase price that constitutes the consideration transferred:

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The fair value of the Company’s common stock issued (684 shares of common stock) as consideration transferred was determined on the basis of market prices of our common stock available on November 22, 2021, the trading day on the acquisition date.

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The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:

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The acquired intangible assets of OpenSlate are amortized over their estimated useful lives. Accordingly, customer relationships will be amortized over ten years and developed technology will be amortized over four years. The total weighted-average remaining useful life of the acquired intangible assets is 9.0 years. The Company recognized a deferred tax liability of $5.5 million in relation to the intangible assets acquired.

The goodwill and identified intangible assets are not deductible for tax purposes. The Company incurred acquisition-related transaction costs of $2.2 million included in General and administrative expenses in the Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2021.

The goodwill associated with OpenSlate includes the acquired assembled work force, the value associated with the opportunity to leverage the work force to continue to develop the future generations of verification technology assets, as well as the ability to grow the Company through adding additional customer relationships or new solutions in the future.

The preliminary allocations of the purchase price for OpenSlate are subject to revisions as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The revisions may have a significant impact on the accompanying consolidated financial statements. The allocations of the purchase price will be finalized once all information is obtained and assessed, not to exceed one year from the acquisition date.

The acquisition of OpenSlate was immaterial to the Company's Consolidated Financial Statements for the years ended December 31, 2021 and 2020, and therefore, supplemental information disclosure on an unaudited pro forma basis is not presented.

Zentrick NV

On February 15, 2019, the Company acquired all of the outstanding stock of Zentrick. Zentrick, headquartered in Ghent, Belgium is a digital video technology company that provides middleware solutions that increase the performance of online video advertising for brand advertisers, advertising platforms and publishers. This acquisition integrates technology into the Company’s suite of products related to advertising viewability specifically on video formats, a growing segment of the advertising market and critical for the delivery of verification services to social platforms and CTV. The aggregate purchase price consists of 1) $23.2 million paid in cash at closing, which excluded closing adjustments of approximately $0.2 million paid in April 2019 2) $0.1 million in holdback payment of which 50% was payable 12 months after the closing date, and the remaining 50% was payable 24 months after the closing date and 3) up to $17.3 million of performance-based deferred payments that comprises two components (the “Zentrick Deferred Payment Terms”). The first component has a $4.0 million maximum payment related to four milestone tranches of $1.0 million each based on achievement of certain product milestones (“technical milestones”). The second component has a total maximum payment of $13.0 million and varies based upon certain revenue targets in fiscal 2019, 2020, and 2021 (“revenue targets”).

Under the Zentrick Deferred Payment Terms, a portion of the technical milestones and revenue targets have been accounted at fair value as contingent consideration in the business combination with the remaining portion being accounted for as compensation expense under ASC 710, Compensation - General.

For the year ended December 31, 2021, contingent consideration had a fair value of $1.7 million and is recorded in Contingent Considerations Current in the Consolidated Balance Sheets. The change in fair value in the Consolidated Statement of Operations and Comprehensive Income for the years ended December 31, 2021, 2020 and 2019 was an unrealized loss of $0.1 million, an unrealized gain of $0.9 million and an unrealized gain of $1.1 million, respectively.

For the year ended December 31, 2021, the components treated as compensation cost total $1.1 million and is included in Other Current Liabilities in the Consolidated Balance Sheets. For the years ended December 31, 2021, 2020 and 2019, less than $0.1 million, $0.2 million and $1.7 million were charged to the Consolidated Statements of Operations and Comprehensive Income.

As described in Footnote 14, Commitments and Contingencies, the Company and the Zentrick selling stockholders reached an agreement for the early termination of the Zentrick Deferred Payment Terms and resolution of the contingent payments due for both the technical milestones and revenue targets. On February 16, 2022, pursuant to the terms of the Zentrick Early Termination Agreement, the Company made a payment of $5.6 million to the Zentrick selling stockholders and recorded $2.8 million of additional expense in General and administrative expense in the Consolidated Statement of Operations and Comprehensive Income and is included in Other Current Liabilities in the Consolidated Balance Sheets as this amount was deemed probable as of December 31, 2021.