Zynga 2015 Annual Report Download - page 25

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Table of Contents
Ourbusinesswillsufferifweareunabletosuccessfullyacquireorintegrateacquiredcompaniesintoourbusinessorotherwisemanagethegrowthassociated
withmultipleacquisitions.*
We have acquired businesses, personnel and technologies in the past and we intend to continue to evaluate and pursue acquisitions and strategic investments.
These acquisitions and strategic investments could be material to our financial condition or results of operations.
Challenges and risks from such investments and acquisitions include:
• negative effects on products and product pipeline from the changes and potential disruption that may follow the acquisition;
• diversion of our management’s attention away from our business;
• declining employee morale and retention issues resulting from changes in compensation, or changes in management, reporting relationships, or future
prospects;
• significant competition from other game companies as the social game industry consolidates;
• the need to integrate the operations, systems, technologies, products and personnel of each acquired company, the inefficiencies and lack of control
that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with
integration;
• the difficulty in determining the appropriate purchase price of acquired companies may lead to the overpayment from certain acquisitions and the
potential impairment of intangible assets and goodwill acquired in the acquisitions;
• the difficulty in successfully evaluating and utilizing the acquired products, technology or personnel;
• the potential incurrence of debt, contingent liabilities, amortization expenses or restructuring charges in connection with any acquisition;
• the need to implement controls, procedures and policies appropriate for a larger public company at companies that prior to acquisition had lacked such
controls, procedures and policies;
• the difficulty in accurately forecasting and accounting for the financial impact of an acquisition transaction, including accounting charges and
integrating and reporting results for acquired companies that do not historically follow U.S. GAAP;
• the fact that we may be required to pay contingent consideration in excess of the initial fair value; and contingent consideration may become payable at
a time when we do not have sufficient cash available to pay such consideration;
• under purchase accounting, we may be required to write off deferred revenue which may impair our ability to recognize revenue that would have
otherwise been recognizable which may impact our financial performance or that of the acquired company;
• risks associated with our expansion into new international markets and doing business internationally, including those described under the risk factor
caption “Our international operations are subject to increased challenges and risks” elsewhere in this Annual Report on Form 10-K;
• in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic,
currency, political and regulatory risks associated with specific countries;
• in some cases, the need to transition operations and players onto our existing or new platforms and the potential loss of, or harm to, our relationships
with employees, players and other suppliers as a result of integration of new businesses;
• in certain instances, the ability to exert control of acquired businesses that include earnout provisions in the agreements relating to such acquisitions or
the potential obligation to fund an earnout for, or other obligations related to, a product that has not met expectations;
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