Acquisitions

3 Months Ended

Mar. 31, 2017

Acquisitions

Acquisitions

9. Acquisitions

During the three months ended March 31, 2017 and 2016, a subsidiary of the Company acquired the assets of multiple dealership locations. The Company used its working capital, a combination of cash and floor plan financing and member’s capital contributions to complete the acquisitions. The acquired businesses were recorded at their estimated fair values under the acquisition method of accounting. The balance of the purchase prices in excess of the fair values of net assets acquired were recorded as goodwill.

For the three months ended March 31, 2017, concurrent with the acquisition of dealership businesses, the Company purchased real properties for $6.0 million from related parties of the sellers. For the three months ended March 31, 2016, concurrent with the acquisition of dealership businesses, the Company purchased real properties for $9.5 million from related parties of the sellers. For the three months ended March 31, 2016, the Company sold other real properties to a third party in sale-leaseback transactions for $1.2 million.

A summary of the purchase price allocations for the acquisitions consists of the following:

	Three Months Ended March 31,
($ in thousands)	2017		2016
Assets (liabilities) acquired (assumed) at fair value:
Accounts receivable	$	—	$	944
Inventory		29,625		25,989
Property and equipment		467		—
Intangibles		—		635
Goodwill		45,832		33,469
Security deposits		—		1,349
Other assets		3		142
Accrued expenses		(479)		(2,277)
Purchase price		75,448		60,251
Inventory purchases financed via floor plan		(16,805)		(22,265)
Cash payment net of floor plan financing	$	58,643	$	37,986

The fair values above are preliminary as they are subject to measurement period adjustments for up to one year from the date of acquisition as new information is obtained about facts and circumstances that existed as of the acquisition date. The amount of acquired goodwill that was deductible for tax purposes for the three months ended March 31, 2017 and 2016 was $45.8 million and $33.5 million, respectively. Included in the three months ended March 31, 2017 and 2016 consolidated financial results were $11.5 million and $12.2 million of revenue, respectively, and $0.5 million and $0.2 million of pre-tax income, respectively, of the acquired dealerships from the applicable acquisition dates.