Note 4. Business Acquisitions

During the fourth quarter of 2020, the Company acquired all the membership interest interests in LEEDS, a New Jersey based technology company. The purchase consideration included cash consideration of $21.6 million and $2.0 million in ShotSpotter common stock. The purchase consideration also included a contingent earnout payable based on LEEDS’ revenues generated during 2021 and 2022. The acquisition date fair value of the contingent earnout was $0.2 million, resulting in a total purchase consideration of $23.8 million.

Goodwill primarily represents the value of the employee workforce as well as cash flows from future customers. The Company expects to deduct the amortization of goodwill and intangible assets for tax purposes. A portion of the amortization deduction will commence upon settlement of contingent consideration and contingent liabilities.

The Company valued the customer relationship asset using the income approach. Significant assumptions include forecasts of revenues, cost of revenues, research and development expense, sales and marketing expense, general and administrative expense and estimated customer attrition rates. The Company discounted the cash flows at seven percent, reflecting the risk profile of the asset. The customer relationship asset is being amortized over an estimated useful life of 15 years.

Acquisition-related expenses totaled $0.2 million and $0.6 million for the years ended December 31, 2021 and 2020, respectively, which were included in general and administrative expense in the consolidated statements of operations.