Note 4 - Business Combinations
|6 Months Ended|
Apr. 30, 2019
|Notes to Financial Statements|
|Business Combination Disclosure [Text Block]||
April 2019Acquisition of Atlas
April 15, 2019,the Company acquired Atlas Concrete Pumping, Inc., a concrete pumping provider based in Boise, Idaho, for a purchase price of
$3.4million, which was paid using a combination of
$2.3million in cash and
$1.1million in common stock. This acquisition qualified as a business combination under ASC
805.The Company has preliminarily recorded all assets acquired and liabilities assumed at their acquisition-date fair values, with approximately
$1.6million being allocated to equipment,
$0.3million allocated to working capital assets,
$0.8million being allocated to finite-lived intangible assets, and
$0.8million being recognized as goodwill. Goodwill represents expected synergies from combining operations and the assembled workforce.
December 2018Acquisition of CPH
December 6, 2018,the Company consummated the Business Combination. This acquisition qualifies as a business combination under ASC
805.Accordingly, the Company will record all assets acquired and liabilities assumed at their acquisition-date fair values, with any excess recognized as goodwill. Goodwill recorded from the transaction represents the value provided by the Company’s leading market share in a highly-fragmented industry.
The following table represents the preliminary allocation of consideration to the assets acquired and liabilities assumed at their estimated acquisition-date fair values:
Note: Cash in table above is net of
$1.0million in cash acquired
Identifiable intangible assets acquired consist of customer relationships of
$168.7million and trade names of
$52.0million. The customer relationships were valued using the multi-period excess earnings method. The Company determined the useful life of the customer relationships to be
15years. The trade names were valued using the relief-from-royalty method. The Company determined the useful life of the trade name associated with Camfaud to be
10years. The Company determined the trade names associated with Brundage-Bone and Eco-Pan to be indefinite.
April 30, 2019,the Company adjusted the valuation of its property and equipment as part of a measurement period adjustment by
$3.9million, with a corresponding offset to goodwill and a net change to deferred tax liabilities of
$2.1million. Additionally, a net working capital adjustment of
$4.0million was made to the previous owners of the Predecessor and has been reflected as an increase in total consideration to acquire the business.
CPH incurred transaction costs of
$14.2million and debt extinguishment costs of
$16.4million independently prior to the Business Combination. Industrea incurred transaction costs of
$18.8million independently prior to the Business Combination, i.e. before
December 5, 2018,of which
$8.1million was related to the payment of deferred underwriting commissions, and Industrea’s Pre-Business Combination financial results are
notconsolidated with the Predecessor (Note
2), these costs are
notreflected in the Predecessor Financial Statements.
Additional costs consisting of stock option and other compensation related expenses were recorded in connection with the Business Combination. These costs were solely contingent upon the completion of the business combination and did
notinclude any future service requirements. As such, these costs will be presented “on the line” and are
notreflected in either Predecessor or Successor financial statements. “On the line” describes those expenses triggered by the consummation of a business combination that were incurred by the acquiree, i.e. CPH, that are
notrecognized in the Statement of Operations of either the Predecessor or Successor as they are
notdirectly attributable to either period but instead were contingent on the Business Combination.
In conjunction with the Business Combination, there were
$20.1million of transaction bonuses and, as a result of a change in control provision for stock-based awards, certain unvested stock-based awards immediately vested, resulting in the recognition of compensation expense of approximately
$0.6million. These expenses were
notreflected in either the Predecessor or Successor consolidated statements of operations and comprehensive income (loss) periods, but instead are presented “on the line.”
April 2018acquisition of O’Brien (Predecessor)
April 2018,Brundage-Bone entered into an asset purchase agreement to acquire substantially all assets of Richard O’Brien Companies, Inc., O’Brien Concrete Pumping-Arizona, Inc., O’Brien Concrete Pumping-Colorado, Inc. and O’Brien Concrete Pumping, LLC (collectively, “O’Brien” or the "O’Brien Companies”) for cash.
This acquisition qualified as a business combination under ASC
805.Accordingly, the Predecessor recorded all assets acquired and liabilities assumed at their acquisition-date fair values, with any excess recognized as goodwill. Goodwill represents expected synergies from combining operations and the assembled workforce. The acquisition was part of the Predecessor’s strategic plan to expand their presence in the Colorado and Arizona markets.
The following table represents the total consideration transferred and its allocation to the assets acquired and liabilities assumed at their acquisition-date fair values:
Acquisition-related expenses incurred by the Predecessor amounted to
$0.0million of which were recognized in the Consolidated Statements of Income for the
April 30, 2018 (Predecessor) as the acquisition occurred after the aforementioned Predecessor period.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information presents the combined results of operations for the Company and gives effect to the Business Combination and the acquisition of the O’Brien as if they had occurred on
November 1, 2017.The unaudited pro forma financial information is presented for illustrative purposes only and is
notnecessarily indicative of the results of operations that would have been realized if the Business Combination and the acquisition of the O’Brien had been completed on
November 1, 2017,nor does it purport to project the results of operations of the combined company in future periods. The unaudited pro forma financial information does
notgive effect to any anticipated integration costs related to the acquired company.
The unaudited pro forma financial information is as follows:
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef