TLEO » Topics » Acquisition of Recruitforce.com, Inc.

This excerpt taken from the TLEO 10-K filed Mar 16, 2007.
Acquisition of Recruitforce.com, Inc.
 
On March 10, 2005 the Company acquired Recruitforce.com (“Recruitforce”), a California corporation, which provides an internet-based hiring management system to small and medium-sized businesses. The Company believes that Recruitforce’s product is complementary to its existing product offerings and that the acquisition will expand the Company’s customer reach.
 
The Company acquired 100% of the outstanding stock of Recruitforce for approximately $3.9 million in cash, including acquisition related costs. The payment terms for the acquisition were $1.0 million at the date of acquisition with the balance paid 90 days after that date, subject to customary escrow provisions. As a result of the acquisition and the allocation of the purchase price, intangible assets of approximately $3.8 million were recorded as identified in the table below. Goodwill of $3.1 million relates to product synergies and value associated with being able to leverage the sales capability of the Company’s sales team to (i) market the acquired product lines and (ii) target the Recruitforce market segment. During the year ended December 31, 2006, the Company did not record any in-process research and development charges in connection with the acquisition.
 
The following table summarizes the fair values of the Recruitforce assets acquired and the liabilities assumed at the date of acquisition:
 
                 
Description
  Amount     Assigned Life  
    (In thousands)        
 
Goodwill
  $ 3,051        
Existing technology
    623       5 years  
Customer relationships
    93       5 years  
                 
      3,767          
Cash acquired
    51          
Other assets
    222          
Liabilities assumed
    (136 )        
                 
Total purchase price
  $ 3,904          
                 


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Table of Contents

TALEO CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The excess of the purchase price over the fair value of the identifiable net assets acquired of approximately $3.1 million was allocated to goodwill. The amount paid for goodwill is not deductible for tax purposes.
 
The Company has not presented pro forma financial statements for this acquisition, as the pre-acquisition operations of Recruitforce were immaterial. Concurrent with the acquisition, the Company entered into employment and noncompetition agreements with two selling shareholders of Recruitforce. Each employment agreement covers a period of two years with payments made annually on the anniversary of the effective date of the agreement. Total compensation associated with these agreements approximates $1.4 million and includes forfeiture rights should either agreement be terminated due to cause or without good reason (as defined in the employment agreement). The Company is recording compensation expense ratably over the terms of the agreements. The Company recognized compensation expense of $0.7 million and $0.5 million for the years ended December 31, 2006 and 2005, respectively, under the agreements. Recruitforce’s results have been included in the Company’s Consolidated Statement of Operations beginning on the date of acquisition forward.
 
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