9. Acquisitions

Dealerships and Consumer Shows

During the nine months ended September 30, 2017 and 2016, subsidiaries of the Company acquired the assets of multiple dealership locations and consumer shows. The Company used a combination of cash, floor plan financing, proceeds from the May 2017 Public Offering (defined and described in Note 13 — Stockholders’ Equity), and additional borrowing on the Existing Term Loan Facility in March 2017 (see Note 4 — Long-term Debt) 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 nine months ended September 30, 2017 and 2016, concurrent with the acquisition of dealership businesses, the Company purchased real properties for $12.2 million and $12.9 million, respectively, from parties related to the sellers of the dealership businesses. For the nine months ended September 30, 2017 and 2016, the Company sold other real properties to a third party in sale-leaseback transactions for $6.0 million and $7.3 million, respectively.

The estimated fair values of the assets acquired and liabilities assumed for the acquisitions of dealerships and consumer shows consist of the following:


	Nine Months Ended September 30,				Estimated
($ in thousands)	2017		2016		Life
Tangible assets (liabilities) acquired (assumed):
Accounts receivable	$	1,306	$	944
Inventory		98,869		29,713
Property and equipment		835		635
Other assets		72		142
Accrued liabilities		(3,019)		(2,231)
Other liabilities				(75)
Total tangible net assets acquired		98,063		29,128
Intangible assets acquired:
Membership and customer lists		793		2,774	4-7 years
Total intangible assets acquired		793		2,774
Goodwill		143,788		35,786
Purchase price		242,644		67,688
Inventory purchases financed via floor plan		(79,321)		(22,265)
Cash payment net of floor plan financing	$	163,323	$	45,423

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. All of the acquired goodwill for the nine months ended September 30, 2017 and 2016 is expected to be deductible for tax purposes. Included in the nine months ended September 30, 2017 and 2016 consolidated financial results were $210.7 million and $55.3 million of revenue, respectively, and $13.8 million and $1.7 million of pre-tax income, respectively, of the acquired dealerships from the applicable acquisition dates.

Gander Mountain and Overton’s

On May 26, 2017, CWI, Inc. (“CWI”), an indirect subsidiary of the Company, completed the acquisition of certain assets of the Gander Mountain Company (“Gander Mountain”) and its Overton’s, Inc. (“Overton’s”) boating business through a bankruptcy auction that took place in April 2017 for $35.4 million in cash and $1.1 million of contingent consideration. Prior to the acquisition, Gander Mountain operated 160 retail locations and an e-commerce business that serviced the hunting, camping, fishing, shooting sports, and outdoor markets. Overton’s operates two retail locations and an e-commerce business that services the marine and watersports markets. The Company believes these businesses are complementary to its existing businesses and will allow for cross marketing of the Company’s consumer services and plans to a wider customer base.

The assets acquired included the right to designate any real estate leases for assignment to CWI or other third parties (the “Designation Rights”), other agreements CWI could elect to assume, intellectual property rights, operating systems and platforms, certain distribution center equipment, Overton’s inventory, the Gander Mountain and Overton’s e-commerce businesses, and fixtures and equipment for Overton’s two retail locations and corporate operations. Furthermore, CWI had committed to exercise Designation Rights and take an assignment of no fewer than 15 Gander Mountain retail leases on or before October 6, 2017, in addition to the two Overton’s retail leases assumed at the closing of the acquisition. The Designation Rights expired on October 6, 2017, immediately after CWI assumed the minimum 15 additional Gander Mountain retail leases. CWI also assumed certain liabilities, such as cure costs for leases and other agreements it elected to assume, accrued time off for employees retained by CWI and retention bonuses payable to certain key Gander Mountain employees retained by CWI. The cure costs for the minimum 15 Gander Mountain leases assumed under the Designation Rights were $1.1 million and recorded as contingent consideration.

The estimated fair values of the assets acquired and liabilities assumed for the acquisition of Gander Mountain and Overton’s consist of the following:


	Estimated		Estimated
($ in thousands)	Fair Value		Life
Tangible assets (liabilities) acquired (assumed):
Inventory	$	9,965
Prepaid expenses and other assets		42
Property and equipment		8,436
Accrued liabilities		(373)
Total tangible net assets acquired		18,070
Intangible assets acquired:
Trademarks and trade names		14,800	15 years
Membership and customer lists		500	6 years
Websites		1,900	10 years
Total intangible assets acquired		17,200
Goodwill		1,329
Purchase price		36,599
Contingent consideration unpaid at September 30, 2017		(1,021)
Cash paid for acquisition	$	35,578

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. All of the acquired goodwill from this acquisition is expected to be deductible for tax purposes. Included in the nine months ended September 30, 2017 consolidated financial results were $22.3 million of revenue and $11.3 million of pre-tax loss of Gander Mountain and Overton’s from the acquisition date.

TheHouse.com

On August 17, 2017, Camping World, Inc. (“CW”), an indirect subsidiary of the Company, completed the acquisition of all of the outstanding capital stock and outstanding debt of Active Sports, Inc. (“TheHouse.com”), which specializes in bikes, sailboards, skateboards, wakeboards, snowboards, and outdoor gear. TheHouse.com is primarily an online retailer and operates two retail locations. The Company believes this business is complementary to its existing businesses and enhances the product offerings from its earlier acquisition of Gander Mountain. The purchase price consisted of $30.0 million in cash, $5.7 million in restricted shares of Class A common stock of the Company, and the purchase or extinguishment of $35.3 million of TheHouse.com’s debt, including accrued interest.

The estimated fair values of the assets acquired and liabilities assumed for the acquisition of TheHouse.com consist of the following:


	Estimated		Estimated
($ in thousands)	Fair Value		Life
Tangible assets (liabilities) acquired (assumed):
Cash and cash equivalents	$	501
Accounts receivable		159
Inventory		36,317
Prepaid expenses and other assets		1,120
Property and equipment		548
Accounts payable		(7,582)
Accrued liabilities		(827)
Deferred tax liabilities		(6,016)
Total tangible net assets acquired		24,220
Intangible assets acquired:
Trademarks and trade names		14,039	15 years
Websites		4,090	10 years
Total intangible assets acquired		18,129
Goodwill		28,683
Purchase price		71,032
Cash and cash equivalents acquired		(501)
Non-cash consideration - Class A shares issued		(5,720)
Cash paid for acquisition, net of cash acquired	$	64,811

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 is expected to be deductible for tax purposes is $3.4 million. Included in the nine months ended September 30, 2017 consolidated financial results were $3.7 million of revenue and $0.2 million of pre-tax loss of TheHouse.com from the acquisition date.

W82

On September 22, 2017, W82, LLC, an indirect subsidiary of the Company, completed the acquisition of substantially all of the assets of EIGHTEEN0THREE LLC, dba W82 (“W82”), which specializes in snowboarding, skateboarding, longboarding, swimwear, footwear, apparel and accessories. The Company believes this business is complementary to its existing businesses and enhances the product offerings from its earlier acquisition of Gander Mountain. The purchase price consisted in $0.6 million in cash and the extinguishment of $1.5 million of W82’s debt, including accrued interest.

The estimated fair values of the assets acquired and liabilities assumed for the acquisition of W82 consist of the following:


	Estimated
($ in thousands)	Fair Value
Tangible assets (liabilities) acquired (assumed):
Inventory	$	847
Prepaid expenses and other assets		7
Property and equipment		546
Accrued liabilities		(790)
Total tangible net assets acquired		610
Goodwill		1,497
Purchase price	$	2,107

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. All of the acquired goodwill from this acquisition is expected to be deductible for tax purposes. Included in the nine months ended September 30, 2017 consolidated financial results were $34,000 of revenue and $8,000 of pre-tax loss of W82 from the acquisition date.