ACQUISITION

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

(3) ACQUISITION

On November 1, 2021, the Company, through its wholly-owned subsidiaries Vertiv Holdings Ireland DAC, a private company limited by shares incorporated in Ireland and Vertiv International Holding Corporation, an Ohio corporation, acquired the shares of E&I Engineering Ireland Limited, a private company limited by shares incorporated in Ireland, and its affiliate Powerbar Gulf LLC (“E&I”).

As of September 30, 2022 in conjunction with the E&I acquisition, the value of the contingent earnout is zero based on E&I’s projected future results. For the nine months ended September 30, 2022 the decrease in the fair value of contingent consideration of $3.7 is included within “Other operating expense (income)” on the Unaudited Condensed Consolidated Statements of Earnings (Loss).

During the measurement period there was one change to the purchase price allocation related to a final working capital adjustment to the purchase price. The measurement period adjustment did not have a material impact on the Unaudited Condensed Consolidated Statements of Earnings (Loss). The following is the preliminary purchase price allocation of assets acquired and liabilities assumed as of the acquisition date and related adjustments thereafter:


	Preliminary Allocation		Adjustments		Adjusted Preliminary Allocation
Accounts receivable	$	87.7	$	—	$	87.7
Inventories	50.1		—		50.1
Other current assets	15.7		—		15.7
Property, plant and equipment	87.1		—		87.1
Goodwill	748.2		5.0		753.2
Other intangible assets	1,004.2		—		1,004.2
Other assets	10.4		—		10.4
Accounts payable	33.9		—		33.9
Accrued expenses and other liabilities	50.0		—		50.0
Deferred income taxes	129.8		—		129.8
Other long-term liabilities	24.3		—		24.3
Net assets acquired and liabilities assumed	$	1,765.4	$	5.0	$	1,770.4

Goodwill was calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of net assets recognized for E&I, and represents the future economic benefits, including synergies, and assembled workforce, that are expected to be achieved as a result of the consummation of the acquisition of E&I. The goodwill arising from the acquisition is not expected to be deductible for tax purposes. The adjusted preliminary goodwill allocation of $277.0 and $476.2 is allocated to the Americas and the Europe, Middle East & Africa segments, respectively.

The following table represents the definite lived intangible assets acquired, the preliminary fair values and respective useful lives as of the acquisition date:

Useful Life

Preliminary Fair Value

Customer relationships

15 to 16 years

731.6

Developed technology

13 years

180.7

Trademarks

15 to 16 years

52.3

Backlog

1 year

39.6

Total intangible assets

1,004.2

The Company used the multi-period excess earnings method to value the customer relationship intangible assets and the relief from royalty method to value the developed technology intangible assets. The significant assumptions used to estimate the fair value of customer relationships included forecasted earnings before interest, taxes, and amortization, customer attrition rates and a discount rate. The significant assumptions used to estimate the fair value of developed technology included the forecasted revenues, royalty rates and a discount rate. These significant assumptions are forward-looking and could be affected by future economic and market conditions. The estimated weighted-average useful life was 14.2 years for finite lived intangible assets.

For the three and nine months ended September 30, 2022, E&I net sales were $115.2 and $316.9, respectively, which are included in “Net sales” and operating losses were $3.7 and $27.3, respectively, which are included in “Income (loss) before income taxes, net” on the Unaudited Condensed Consolidated Statement of Earnings (Loss).

Pro Forma Financial Information

In accordance with ASC 805 Business Combinations, the following unaudited pro forma results of operations for the three and nine months ended September 30, 2021 assumes the E&I business combination was completed on January 1, 2020. The following pro forma results include adjustments to reflect acquisition related costs, additional interest expense and amortization of debt issuance costs, accounting policies applied to E&I after the business combination, amortization of intangibles associated with the business combination and the effects of adjustments made to the carrying value of certain assets.


Unaudited proforma information	Three months ended September 30, 2021		Nine months ended September 30, 2021
Net sales	$	1,322.2	$	3,884.4
Net income (loss)	43.9		63.0

The unaudited pro forma results contain adjustments to give effect to pro forma events that are directly attributable to the business combination, factually supportable, and expected to have a continuing impact on the combined results. Pro forma data may not be indicative of the results that would have been obtained had the business combination occurred at the beginning of the periods presented, nor is it intended to be a projection of future results. Additionally, the pro forma financial information does not reflect the costs which the Company has incurred or may incur to integrate the acquired business.