|6 Months Ended|
Jun. 30, 2021
13. BUSINESS COMBINATIONS
We continue to acquire businesses as part of our ongoing strategy to grow our company and expand our market share. Each acquisition has been accounted for as a business combination under ASC 805, “Business Combinations.” There were no acquisition related costs for the three months ended June 30, 2021 and 2020, respectively. Acquisition related costs for the six months ended June 30, 2021 and 2020 were $0.7 million and $0.2 million, respectively. Acquisition related costs are included in selling, general, and administrative expense in our condensed consolidated statements of operations.
The tables below provide a summary of businesses acquired in 2021 including, for significant acquisitions, the net sales and net income (loss) incurred for the three and six months ended June 30, 2021:
Pro Forma Results
The following unaudited pro forma information has been prepared as if the 2021 acquisitions described above had taken
The following table details the additional expense included in the unaudited pro forma operating income as if the 2021
Purchase Price Allocations
The estimated fair values of the assets acquired and liabilities assumed for the 2021 acquisitions approximated the following as of June 30, 2021, in thousands:
Estimates of acquired intangible assets related to the 2021 acquisitions are as follows, as of June 30, 2021, dollars in thousands:
The table below provides a summary as of June 30, 2021 for businesses acquired during the six months ended June 30, 2020:
As third-party or internal valuations are finalized, certain tax aspects of the foregoing transactions are completed, and customer post-closing reviews are concluded, adjustments may be made to the fair value of assets acquired, and in some cases total purchase price, through the end of each measurement period, generally one year following the applicable acquisition date. Goodwill to be recognized in connection with these acquisitions is attributable to the synergies expected to be realized and improvements in the businesses after the acquisitions. Primarily all of the $84.5 million and $11.0 million of goodwill recorded from acquisitions for the six months ended June 30, 2021 and 2020, respectively, is expected to be deductible for income tax purposes.
The acquisition of Viking included a contingent consideration arrangement that requires additional consideration to be paid by TopBuild based on the achievement of annual gross revenue targets over a three-year period. The range of undiscounted amounts TopBuild may be required to pay under the contingent consideration agreement is between zero and $1.5 million. The fair value of the contingent consideration recognized on the acquisition date of $1.2 million was estimated by applying the income approach using discounted cash flows. That measure is based on significant Level 3 inputs not observable in the market. The significant assumption includes a of 10.0%. Changes in the fair value measurement each period reflect the passage of time as well as the impact of adjustments, if any, to the likelihood of achieving the specified targets. We made a contingent payment of $0.5 million in the year ended December 31, 2020.
The acquisition of Cooper includes a contingent consideration arrangement that requires additional consideration to be paid by TopBuild based on the achievement of annual gross revenue targets over a two-year period. The range of undiscounted amounts TopBuild may be required to pay under the contingent consideration agreement is between zero and $1.0 million, which also represents the fair value recognized on the acquisition date. Changes in the fair value measurement each period reflect the passage of time as well as the impact of adjustments, if any, to the likelihood of achieving the specified targets. We made a contingent payment of $0.2 million during the six months ended June 30, 2021 and the remaining liability for contingent consideration has been released with no further payments anticipated.
Payments of contingent consideration are classified as either financing or operating activities on our condensed consolidated statement of cash flows in accordance with ASC 230-10-45. The following table presents the fair value of contingent consideration, in thousands:
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