Quarterly report pursuant to Section 13 or 15(d)

Business Acquisitions

v3.23.3
Business Acquisitions
 9 Months Ended
Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
Business Acquisitions Business Acquisitions
Acquisition of MFG.com
On April 22, 2022, the Company completed the acquisition of the outstanding assets of MP2020, Inc. ("MFG.com" or "MFG") under an Asset Purchase Agreement ("MFG Purchase"). MFG.com is expected to help the Company's software strategy by providing an immediate supply chain of a wide range of traditional manufacturing services that its customers can leverage.
The following table summarizes the total consideration for the MFG Purchase:
April 22, 2022
Cash consideration $ 2,700 
Holdback consideration 300 
Total consideration $ 3,000 
The holdback consideration represents the portion of the purchase price to be paid within 12 months from the closing date, subject to reduction for certain indemnifications and other potential obligations of the acquired businesses. The holdback consideration was recorded in accrued expenses and other liabilities on the unaudited condensed consolidated balance sheets and was paid January 2023.
The Company has accounted for the MFG Purchase as a business combination in accordance with ASC Topic 805, Business Combinations ("ASC 805"). The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed:
April 22, 2022
Assets acquired:
Goodwill $ 1,954 
Intangible assets 1,604 
Other assets 15 
Total assets acquired 3,573 
Liabilities assumed:
Deferred revenue 573 
Total liabilities assumed 573 
Net assets acquired $ 3,000 
The estimated useful lives of the identifiable intangible assets acquired is as follows:
Gross Value Estimated Life (in years)
Customer relationships $ 264  10
Trade name 240  10
Acquired software platform 910  10
Customer list 190  3
Total intangible assets $ 1,604 
The goodwill will not be deductible for tax purposes. The Company incurred $212 of transaction costs related to this acquisition, which are included in general and administrative expenses on the unaudited condensed consolidated statements of operations.
The Company has determined that the impact of the MFG Purchase was not material to its condensed consolidated financial statements; therefore, separate presentation of revenue and earnings since the acquisition date and pro forma information are not required nor included herein.
Acquisition of Linear AMS
On May 9, 2022, the Company completed the acquisition of the membership interest of Linear Mold & Engineering, LLC ("Linear AMS" or "Linear") under a Membership Interest Purchase Agreement (the "Linear AMS Purchase"). Linear is expected to help the Company expand its go to market strategy by leveraging Linear's highly technical business development and user application experience and extend its enterprise customer base in key markets.
The following table summarizes the total consideration for the Linear AMS Purchase:
May 9, 2022
Cash consideration $ 6,090 
Holdback consideration 800 
Earnout consideration liability 2,900 
Total consolidation $ 9,790 
The holdback consideration represents the portion of the purchase price payable 12 months from the closing date, subject to reduction for certain indemnifications and other potential obligations of Linear AMS. The estimated fair value of the earnout consideration liability at acquisition was determined using a Monte Carlo simulation based on certain performance metrics for the 12 months ended December 31, 2022. During 2022, the Company recognized a non-cash gain of $1,824 as a result of the actual revenue performance of Linear for the year ended December 31, 2022. The final earnout consideration liability was paid in cash of $539 and a non-cash issuance of equity valued at $537 in April 2023.
The Company has accounted for the Linear AMS Purchase as a business combination in accordance with ASC 805. The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date:
May 9, 2022
Assets acquired:
Cash and cash equivalents $ 29 
Accounts receivable 1,117 
Inventory 214 
Prepaid expenses 34 
Security deposits 92 
Property and equipment, net 2,086 
Right-of-use assets 2,131 
Goodwill 2,497 
Intangible assets, net 4,199 
Total assets acquired 12,399 
Liabilities assumed:
Accounts payable 308 
Accrued expenses and other liabilities 170 
Operating lease liability 2,131 
Total liabilities assumed 2,609 
Net assets acquired $ 9,790 
The estimated useful lives of the identifiable intangible assets acquired is as follows:
May 9, 2022 Estimated Life (in years)
Customer relationships $ 2,822  10
Trade name 647  10
Noncompetition agreement 52  2
Favorable operating lease 699  4
Unfavorable operating lease (21) 4
Total intangible assets $ 4,199 
The goodwill will not be deductible for tax purposes. The Company incurred $161 of transaction costs related to this acquisition, which are included in general and administrative expenses on the unaudited condensed consolidated statements of operations.
The Company has determined that the impact of the Linear AMS Purchase was not material to its consolidated financial statements; therefore, separate presentation of revenue and earnings since the acquisition date and pro forma information are not required nor included herein.
Acquisition of Maker OS
On April 13, 2022, the Company completed the acquisition of the outstanding assets of Maker OS under an Asset Purchase Agreement ("Maker OS Asset Purchase"). Maker OS is expected to help the Company expand on its manufacturing capabilities and help it build comprehensive ordering services within its software offerings. The total cash consideration paid related to this transaction was $100.
The Company has accounted for the Maker OS Asset Purchase as an asset purchase and no liabilities were assumed as part of the acquisition. The following table summarizes the fair values of assets acquired as of the acquisition date:
April 13, 2022
Assets acquired:
Intangible assets $ 100 
Total assets acquired $ 100 
The Company incurred immaterial transaction costs related to the Maker OS Asset Purchase, which are included in selling, general and administrative expenses on the unaudited condensed consolidated statements of operations.