Company: FLYW
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0000950170-25-027078
Chunk: 245

Company: Flywire Corp
Filing Date: 2025-02-26
Form: 10-K
Item: Item 1B
Chunk 245
---
 of Invoiced Inc. – Valuation of Acquired Relationships and Developed Technology

As described in Notes 1 and 9 to the consolidated financial statements, on August 2, 2024, the Company acquired all of the issued and outstanding shares of Invoiced for estimated total purchase consideration, net of cash acquired, of $51.7 million. Of the acquired intangible assets, $18.6 million of acquired relationships and $7.1 million of developed technology were recorded. Management estimates the fair value of acquired relationships under the income approach using the multi-period excess earnings method and estimates the fair value of acquired developed technology under the income approach using the relief-from-royalty method. Determining the fair value of assets acquired is judgmental in nature and can involve the use of significant estimates and assumptions. Fair value determinations are based on, among other factors, estimates of future expected cash flows, revenue growth rates, royalty rates, operating margins and appropriate discount rates used in computing present values. 

The principal considerations for our determination that performing procedures relating to the valuation of the acquired relationships and developed technology acquired in the acquisition of Invoiced is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the acquired relationships and developed technology acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates and discount rates for the acquired relationships and 

108

developed technology assets acquired; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the acquired relationships and developed technology acquired. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the acquired relationships and developed technology acquired; (iii) evaluating the appropriateness of the multi-period excess earnings and relief from royalty methods used by management; (iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings and relief from royalty methods; and (v) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates and discount rates for the acquired relationships and developed technology. Evaluating management’s assumptions related to revenue growth rates involved considering (i) the current