Acquisitions and Dispositions

12 Months Ended

Dec. 31, 2023

Acquisitions and Dispositions.

Acquisitions and Dispositions

6. Acquisitions and Dispositions

RE/MAX INTEGRA North America Regions Acquisition

On July 21, 2021, the Company acquired the operating companies of the North America regions of INTEGRA whose territories cover five Canadian provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island) and nine U.S. states (Connecticut, Indiana, Maine, Massachusetts, Minnesota, New Hampshire, Rhode Island, Vermont and Wisconsin) for cash consideration of $235.0 million. The Company acquired these companies in order to convert these formerly Independent Regions into Company-Owned Regions, advance its ability to scale, deliver value to its affiliates and recapture the value differential of more than 19,000 agents (approximately 12,000 in Canada and 7,000 in the U.S. The Company funded the acquisition primarily by borrowing additional funds in connection with refinancing its Senior Secured Credit Facility (see Note 10, Debt), as well as using cash from operations.

The Company allocated $40.9 million of the purchase price to a loss on the pre-existing master franchise agreements with INTEGRA which were effectively settled with the acquisition. The loss represents the fair value of the difference between the historical contractual royalty rates paid by INTEGRA and the current market rate. The loss is recorded in “Settlement and impairment charges” in the accompanying Consolidated Statements of Income (Loss).

The following table summarizes the preliminary allocation of the purchase price (net of settlement loss) to the fair value of assets acquired and liabilities assumed for the acquisition (in thousands): 

Cash and cash equivalents and restricted cash	$	14,098
Accounts and notes receivable, net		6,610
Income taxes receivable		494
Other current assets		502
Property and equipment		63
Franchise agreements (a)		92,250
Other intangible assets, net (a)		9,200
Other assets, net of current portion		2,174
Goodwill (b)		108,606
Accounts payable		(3,461)
Accrued liabilities		(14,045)
Income taxes payable		(3,107)
Deferred revenue		(824)
Deferred tax liabilities, net		(16,260)
Other liabilities, net of current portion		(2,200)
Total purchase price allocated to assets and liabilities		194,100
Loss on contract settlement		40,900
Total consideration	$	235,000

(a) The Company expects to amortize the acquired franchise agreements over a weighted average useful life of approximately 12 years and the non-compete agreements included in Other intangible assets, net over a useful life of 5 years using the straight-line method.

(b) The excess of the total purchase price over the fair value of the identifiable assets acquired was recorded as goodwill. The goodwill is attributable to expected synergies and projected long-term revenue growth for the RE/MAX network. The Company expects 50% of the goodwill in Canada but none in the U.S. to be deductible for tax purposes.

The Company finalized its accounting for the INTEGRA acquisition during the three months ended June 30, 2022.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the acquisition of INTEGRA had occurred on January 1, 2021. The pro forma information presented below is for illustrative purposes only and should not be relied upon as necessarily being indicative of the historical results that would

have been obtained if the acquisitions had actually occurred on that date, nor of the results that may be obtained in the future (in thousands).

	Year Ended
	December 31,
	2023 (a)		2022 (a)		2021
Total revenue	$	325,671	$	353,386	$	356,489
Net income (loss) attributable to RE/MAX Holdings, Inc.	$	(69,022)	$	6,110	$	(16,092)

(a) Amounts agree to the Consolidated Statements of Income (Loss) for the twelve months ended December 31, 2023 and 2022, as it includes the actual results from the INTEGRA acquisition and are therefore not pro forma.