|
4. Acquisitions
On June 15, 2010, the Company acquired the stock of Network International, Inc. for approximately $10,305,000. The acquisition price includes an upfront cash payment of $7,500,000 and an earn-out payment. Under the terms of the agreement, the earn-out is based on EBITDA earned by Network International, Inc. during each of the three six month periods after the closing date of the acquisition through December 31, 2011. The Company's estimate of the fair value of the earn-out as of September 30, 2010 was $2,805,000 out of a possible total earn out payment of $7,500,000. During 2011, the entire earn out was accrued for and payments were made for the first two six month measurement periods for a total of approximately $4,338,000. Network International is a leading online marketplace for the sale of idle, surplus and used equipment in the oil and gas, petrochemical and power generation industries. Network International conducts sales of client assets on a consignment basis. The Company incurred $524,000 of acquisition costs which were expensed as incurred. The operating results of Network International have been included in the consolidated financial statements from the date of acquisition.
Goodwill was created as part of the acquisition as the Company acquired an experienced and knowledgeable workforce. The purchase consideration was allocated to acquired tangible assets, identifiable intangible assets, liabilities assumed and goodwill as follows:
|
|
|
|
|
|
|
Consideration
Amount |
|
|
|
(in thousands)
|
|
|
Cash |
|
$ |
3,913 |
|
|
Goodwill |
|
|
5,991 |
|
|
Receivables and other assets |
|
|
648 |
|
|
Deferred tax assets |
|
|
3,753 |
|
|
Covenants not to compete |
|
|
500 |
|
|
Property and equipment |
|
|
133 |
|
|
Deferred tax liability |
|
|
(196 |
) |
|
Other liabilities |
|
|
(4,437 |
) |
| |
|
|
|
|
Total consideration |
|
$ |
10,305 |
|
| |
|
|
|
On June 1, 2011, the Company acquired the assets of Truckcenter.com, LLC. (TC) for approximately $15,989,000. The acquisition price includes an upfront cash payment of $9,000,000 and an earn-out payment. Under the terms of the agreement, the earn-out is based on EBITDA earned by TC during the trailing 12 months ending August 31, 2012, and the revenue earned by TC during each of the two 12 month periods after the closing date of the acquisition through May 31, 2013. The Company's estimate of the fair value of the earn-out as of September 30, 2011 was $6,989,000 out of a possible total earn out payment of $9,000,000. TC is a leading marketplace for the sale of idle, surplus and used fleet and transportation equipment. TC conducts sales of client assets on a consignment basis. The Company incurred $246,000 of acquisition costs which were expensed as incurred. The operating results of TC have been included in the consolidated financial statements from the date of acquisition.
Goodwill was created as part of the acquisition as the Company acquired an experienced and knowledgeable workforce. The purchase consideration was allocated to acquired tangible assets, identifiable intangible assets, and liabilities assumed at fair value and goodwill as follows:
|
|
|
|
|
|
|
Consideration
Amount |
|
|
|
(in thousands)
|
|
|
Current assets |
|
$ |
239 |
|
|
Goodwill |
|
|
14,167 |
|
|
Brand assets |
|
|
623 |
|
|
Intangible technology assets |
|
|
250 |
|
|
Covenants not to compete |
|
|
700 |
|
|
Property and equipment |
|
|
48 |
|
|
Current liabilities |
|
|
(38 |
) |
| |
|
|
|
|
Total consideration |
|
$ |
15,989 |
|
| |
|
|
|
|
