TopBuild Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Business Combinations

Business Combinations

9 Months Ended

Sep. 30, 2022

12. BUSINESS COMBINATIONS

Acquiring businesses is a key 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.” We incurred no acquisition related costs for the three months ended September 30, 2022 and incurred $2.7 million of acquisition related costs in the three months ended September 30, 2021. Acquisition related costs for the nine months ended September 30, 2022 and 2021 were $1.3 million and $3.4 million, respectively. Acquisition related costs are included in selling, general, and administrative expense in our condensed consolidated statements of operations. On October 15, 2021, we acquired DI for $1.0 billion and its results of operations and financial position are aggregated within our Specialty Distribution segment.

The table below provides a summary as of September 30, 2022 for the businesses acquired during the nine months ended September 30, 2022:


2022 Acquisitions	Date		Cash Paid		Contingent Consideration		Total Purchase Price		Goodwill Acquired
Southwest		1/12/2022	$	300	$	—	$	300	$	215
Billings		2/3/2022		7,005		—		7,005		3,313
Green Energy		3/31/2022		1,200		—		1,200		565
Assured		4/7/2022		4,719		500		5,219		3,317
CV		7/21/2022		1,758		—		1,758		946
Total			$	14,982	$	500	$	15,482	$	8,356

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. To that note, during the nine months ended September 30, 2022, DI’s goodwill increased by $10.7 million primarily as a result of the finalization of purchase price adjustments to acquisition date sales and use tax liabilities, net working capital adjustments, property, plant and equipment, and true-ups to supplier rebate receivables.

The table below represents the final fair value of DI’s assets and liabilities assumed as of September 30, 2022:


Finalized purchase price fair values:
Accounts receivable		145,042
Inventories		133,004
Prepaid and other assets		8,820
Property and equipment		37,562
ROU asset (operating)		66,698
Intangible assets		458,000
Goodwill		450,716
Accounts payable		(68,367)
Lease liabilities		(76,066)
Deferred tax liabilities		(83,590)
All other liabilities		(35,854)
Net assets acquired	$	1,035,965

The table below provides a summary as of September 30, 2022 for the businesses acquired during the nine months ended September 30, 2021:


2021 Acquisitions	Date		Cash Paid		Contingent Consideration		Total Purchase Price		Goodwill Acquired
LCR		1/20/2021	$	53,700		—		53,700		19,500
ABS		4/5/2021		124,348		—		124,348		54,229
All others		Various		26,977		1,200		28,177		12,001
Total			$	205,025	$	1,200	$	206,225	$	85,730

Primarily all of the $8.4 million and $85.7 million of goodwill recorded from acquisitions completed in the nine months ended September 30, 2022 and 2021, respectively, is expected to be deductible for income tax purposes.