Goodwill and Intangible Assets, Net
|9 Months Ended|
Sep. 30, 2022
|Goodwill and Intangible Assets Disclosure [Abstract]|
|Goodwill and Intangible Assets, net||
Note 5 - Goodwill and Intangible Assets, net
Based on our qualitative assessment of goodwill, we determined it was necessary to perform a quantitative valuation of goodwill as of March 31, 2022 and June 30, 2022. Unchanged from the year ended December 31, 2021, we determined there were two reporting units: the enterprise reporting unit which is comprised of the enterprise software offerings and the non-enterprise reporting unit which is comprised of the non-enterprise software offerings. The valuation of our goodwill was determined with the assistance of an independent valuation firm using the income approach (discounted cash flows method) and the market approach (guideline public company method). Our significant assumptions in these analyses include, but are not limited to, future cash flow projections, the weighted average cost of capital, the discount rate, the implied control premium, the terminal growth rate, and the tax rate. Our estimates of future cash flows are based on current regulatory and economic climates, recent operating results, and planned business strategies. These estimates could be negatively affected by changes in federal, state, or local regulations or economic downturns. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from the Company’s estimates. If our ongoing estimates of future cash flows are not met, we may have to record additional impairment charges in future periods. We also use the Guideline Public Company Method, a form of the market approach (utilizing Level 3 unobservable inputs), which is derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. As such, we believe the current assumptions and estimates utilized are both reasonable and appropriate.
Enterprise Reporting Unit
During the six months ended June 30, 2022, due primarily to a continued decline in market valuation from December 31, 2021, we recorded an impairment expense of $12.9 million to goodwill for our enterprise reporting unit. To perform our analysis, we applied a 50% weighting to the market approach and 50% weighted to the income approach. We did not record any impairments during the three months ended September 30, 2022 as well as the three and nine months ended September 30, 2021.
Non-Enterprise Reporting Unit
During the six months ended June 30, 2022, due primarily due to a continued decline in market valuation from December 31, 2021, we recorded impairment expenses of $23.5 million including impairments of $12.3 million and $11.2 million for each of the three months ended March 31, 2022 and June 30, 2022, respectively, related to our non-enterprise reporting unit. To perform our analysis, we applied a 25% weighting to the income approach and a 75% weighting to the market approach. We did not record any impairments during the three months ended September 30, 2022 as well as the three and nine months ended September 30, 2021.
Finite-lived Intangible Assets, Net
We performed a two step impairment test for the asset groups that had indicators of impairment during the three months ended June 30, 2022 and as a result of these analyses, we recorded impairments of $3.2 million attributable to certain intangible assets and capitalized software associated with one specific business line within the Non-Enterprise Reporting Unit. We did not record any impairments during the three months ended September 30, 2022 as well as the three and nine months ended September 30, 2021.
The entire disclosure for goodwill and intangible assets.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef