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Acquisitions
 3 Months Ended
Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Acquisitions Acquisitions
Acquisition of Midwest Grinding
On June 10, 2024, pursuant to an asset purchase agreement, Kinetic acquired certain assets and assumed certain liabilities of Midwest Grinding Corp., a Milwaukee grinding house dedicated to precision Blanchard and specialty surface grinding of small to extra-large capacity. Total consideration for the acquisition was $0.6 million. In connection with the acquisition, Kinetic also acquired the building being used in the business for $0.4 million. Total consideration for both the business and building acquisition was $1.0 million, paid in cash at close.
The fair value of the assets acquired and liabilities assumed are based on their estimates of fair value available as of June 10, 2024, as calculated by management. The table below outlines the purchase price allocation of the purchase for Midwest Grinding to the acquired identifiable assets and liabilities assumed as of December 31, 2024 (in $000’s):
Total purchase price$1,000 
Accounts payable1 
Total consideration1,001 
Accounts receivable152 
Other current assets71 
Property and equipment738 
Intangible Assets
Customer relationships$16 
Trade names15 
Non-compete agreement9 
Intangible assets40 
Total assets acquired1,001 
Total goodwill$— 
Acquisition of Central Steel
On May 15, 2024, Precision Marshall acquired Central Steel. Total consideration for the acquisition was approximately $13.9 million, comprised of $10.7 million paid at closing, a seller note of $1.1 million, a holdback, in the amount of $0.3 million, and contingent consideration of $2.0 million paid in the form of a five-year earn-out. The consideration paid at close was funded in part by borrowings under Precision Marshall's credit facility of approximately $3.3 million, and
proceeds from a sale and leaseback transaction, discussed below. The acquisition involved no issuance of stock of the Company.
Simultaneous to the acquisition, the Company entered into a sale and leaseback transaction with Legacy West Partners, LLC, an unrelated party, for one of Central Steel's properties located in Broadview, Illinois. The sales price for the real property subject to the sale and leaseback transaction was approximately $8.3 million, with total proceeds received by the Company of approximately $7.9 million, net of approximately $0.4 million in seller's fees.
The lease agreement includes a 20-year lease term with two five-year renewal options. The base rent under the lease agreement is $58,795 per month for the first year of the term and a 2.0% per annum escalator thereafter. The lease agreement is a “net lease,” such that Central Steel is also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the real property incurred by Central Steel. Due to the highly specialized nature of the leased property, the Company currently believes it is more likely than not that each of the two five-year options will be exercised. Consequently, because the aggregate term of the lease at its conclusion will represent approximately 75% of the economic life of the building, the Company concluded that the lease is a financing transaction and a failed sale and leaseback transaction, as defined under ASC 842. The proceeds, net of closing fees, from the failed sale and leaseback transaction were used to assist in funding the acquisition of Central Steel. No gain was recognized as a result of the sale.
The fair value of the purchase price components was approximately $13.9 million, as detailed below (in $000's):
Purchase price$11,758 
Fair value of contingent consideration2,000 
Holdback122 
Net purchase price$13,880 
Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $2.9 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed over the fair value of the identifiable assets acquired. The Company anticipates all of the goodwill arising from the acquisition to be fully deductible for tax purposes.
The table below outlines the purchase price allocation for the purchase of Central Steel to the acquired identifiable assets, liabilities assumed, and goodwill as of December 31, 2024 (in $000’s):
Total purchase price$13,880 
Accounts payable464 
Accrued liabilities969 
Total liabilities assumed1,433 
Total purchase price plus liabilities assumed15,313 
Cash184 
Accounts receivable2,418 
Inventory2,171 
Property and equipment5,034 
Intangible assets
Trade names400 
Customer relationships900 
Non-compete825 
Subtotal intangible assets2,125 
Other assets475 
Total assets acquired12,407 
Total goodwill$2,906 
Acquisition of Johnson
On November 30, 2023, CRO Affiliated, LLC ("CRO Affiliated"), a subsidiary of Live Ventures, acquired certain assets and assumed certain liabilities of Johnson Floor & Home (“Johnson”), a floor covering retailer and installer serving residential and commercial customers through four locations in the Tulsa, Oklahoma area, and one in Joplin, Missouri. Total consideration for the acquisition was $2.0 million, comprised of cash at close of $0.5 million, deferred consideration in the form of a seller note of $1.2 million, with additional consideration paid in the form of an earnout valued at approximately $0.3 million. The deferred consideration is payable in three $0.4 million installments due annually on the first three anniversary dates following the closing date. Each installment will accrue interest at 6.0% per annum until paid.
The fair value of the purchase price components outlined above was approximately $2.0 million, as detailed below (in $000's):
Cash$500 
Deferred consideration1,200 
Earnout301 
Purchase price$2,001 
The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of November 30, 2023, as calculated by management. The table below outlines the purchase price allocation of the purchase for Johnson to the acquired identifiable assets and liabilities assumed as of December 31, 2024:
Total purchase price$2,001 
Accounts payable1,017 
Accrued liabilities1,141 
Total liabilities assumed2,158 
Total consideration4,159 
Accounts receivable1,252 
Inventory1,127 
Property, plant and equipment157 
Intangible assets
Customer relationships$1,301 
Non-compete agreement306 
Subtotal intangible assets1,607 
Other assets16 
Total assets acquired4,159 
Total goodwill$— 
On May 24, 2024, CRO Affiliated entered into an asset purchase agreement with the original seller of Johnson under which the original seller agreed to purchase certain assets and assume certain obligations acquired by CRO Affiliated under the
original asset purchase agreement. Consequently, CRO Affiliated recorded a loss on disposition of Johnson’s assets and liabilities of approximately $0.3 million, as detailed in the table below (in $000's):
Accounts payable and accrued liabilities$475 
Earnout307 
Seller note1,230 
Lease liabilities2,703 
Total deconsolidation of liabilities4,715 
Inventory613 
Property and equipment206 
ROU assets2,692 
Intangible assets
Customer relationships1,224 
Non-compete agreement281 
Subtotal intangible assets1,505 
Total deconsolidation of assets5,016 
Total loss on disposition$(301)
Acquisition of CRO
On October 13, 2023, CRO Affiliated acquired certain assets and assumed certain liabilities of Carpet Remnant Outlet, Inc. (“CRO”), a floor covering retailer and installer serving residential and commercial customers throughout Northwest Arkansas. Total consideration for the acquisition was approximately $1.4 million and was comprised of cash at close of approximately $1.0 million, an indemnification holdback amount of $0.3 million, and additional consideration valued at $89,000.
The fair value of the purchase price components was $1.4 million, as detailed below (in $000's):
Cash$1,034 
Additional consideration89 
Holdback300 
Purchase price$1,423 
Under the preliminary purchase price allocation, the Company recognized goodwill of $89,000, which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of October 13, 2023, as calculated by an independent third-party firm. The value of the additional
consideration was calculated by management. The Company anticipates the $89,000 of goodwill arising from the acquisition to be fully deductible for tax purposes.
The table below outlines the purchase price allocation of the purchase for CRO to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):
Total purchase price$1,423 
Accounts payable770 
Accrued liabilities1,298 
Total liabilities assumed2,068 
Total consideration3,491 
Accounts receivable259 
Inventory1,406 
Property and equipment261 
Intangible assets
Non-compete agreement1,190 
Subtotal intangible assets1,190 
Other assets286 
Total assets acquired3,402 
Total goodwill$89