Business & Consumer Services: Business combinations (ASC 805)

The Company accounted for the Paycor acquisition as a business combination using the acquisition method of accounting in accordance with ASC 805. The assets acquired and liabilities assumed in the acquisition of Paycor were recorded at their respective fair values as of the acquisition date. Estimates of fair value represent management’s best estimate and require a complex series of judgments about future events and uncertainties. Third-party valuation specialists were engaged to assist in the valuation of certain assets and liabilities. The purchase price allocation as of the acquisition date was subject to change as additional information about the fair values of assets acquired and liabilities assumed became available. Measurement period adjustments were finalized within one year from the acquisition date.

The following table summarizes the components of the purchase consideration:

In millions, except per share amounts
Number of shares of Paycor common stock outstanding (1)	180.5
Cash consideration (per share of common stock)	22.50
Total cash consideration	4,060.6
Fair value of Paycor equity awards replaced by Paychex for pre-combination services (2)	25.1
Total equity consideration	25.1
Total purchase consideration	4,085.7

Represents outstanding shares of Paycor common stock as of April 11, 2025.

Represents the fair value of Paycor's stock-based compensation awards attributable to pre-combination services. ASC 805 requires that the fair value of replacements awards attributable to pre-combination service be included in consideration transferred.

Purchase Price Allocation

During fiscal 2026, the Company adjusted its purchase price allocation, which increased goodwill $ 4.2 million, primarily resulting from the write-down of a building by $ 4.9 million, net of deferred taxes of $ 1.9 million as a result of an updated valuation, offset by a reduction due to a change in deferred tax liability of $ 3.9 million primarily related to return-to-provision adjustments from the predecessor's final tax return. The impact of these changes on previously reported earnings was not material.