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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:
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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