ACQUISITIONS

9 Months Ended

Sep. 30, 2022

ACQUISITIONS

ACQUISITIONS

4. ACQUISITIONS

Business Acquisitions

Business acquisitions are accounted for in accordance with FASB Accounting Standards Codification (“ASC”) Topic 805: Business Combinations.

The Company has incorporated contingent consideration, or earn out provisions, into the structure of its acquisitions. The Company recognizes the fair value of estimated contingent consideration at the acquisition date as part of the consideration transferred in the exchange. The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. The purchase price associated with business acquisitions and the allocation thereof during the nine months ended September 30, 2022 is as follows:

	2022
Number of business acquisitions closed		11
Consideration:
Cash due at closing	$	356,854
Estimated working capital adjustment and other		889
Cash due subsequent to closing at net present value		9,611
Fair market value of Focus LLC common units issued at closing		23,432
Fair market value of estimated contingent consideration		28,869
Total consideration	$	419,655
Allocation of purchase price:
Total tangible assets	$	24,921
Total liabilities assumed		(29,072)
Customer relationships		232,125
Management contracts		8,805
Goodwill		181,302
Other acquired intangibles		1,574
Total allocated consideration	$	419,655

Management believes approximately $368,287 of tax goodwill and intangibles related to business acquisitions completed during the nine months ended September 30, 2022 will be deductible for tax purposes over a 15 year period. Additional tax goodwill may be deductible when estimated contingent consideration is earned and paid.

The accompanying unaudited condensed consolidated statement of operations for the nine months ended September 30, 2022 includes revenue and income from operations for the three business acquisitions that are new subsidiary partner firms from the acquisition date of $15,284 and $460, respectively.

Asset Acquisition

The Company separately purchases customer relationships and other intangible assets. These purchases are accounted for as asset acquisitions as they do not qualify as business acquisitions pursuant to ASC Topic 805: Business Combinations. Total purchase consideration for asset acquisitions during the nine months ended September 30, 2022 consisted of cash of $6,823, cash due subsequent to closing of $3,000 and contingent consideration, the amount of which will be determined when the outcome is determinable.

The weighted-average useful lives of intangible assets acquired during the nine months ended September 30, 2022 are as follows:

	Number of years
Customer relationships	9
Management contracts	7
Other acquired intangibles	5
Weighted-average useful life of all intangibles acquired	9

From October 1, 2022 to November 3, 2022, in aggregate the Company completed eight acquisitions, consisting of asset acquisitions and business acquisitions for cash of $44,452 plus contingent consideration.