ACQUISITIONS

12 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS

ACQUISITIONS

CoolTera Ltd.

On December 4, 2023, the Company entered into a sale and purchase agreement to acquire CoolTera Ltd. The transaction closed on December 8, 2023. CoolTera is a global provider of liquid cooling infrastructure solutions, and designs and manufactures coolant distribution units, secondary fluid networks, and manifolds for data center liquid cooling solutions. The acquisition of CoolTera brings advanced cooling technology, deep domain expertise, controls and systems, and manufacturing and testing for high density compute cooling requirements to the company's existing thermal management portfolio.

E&I

On September 8, 2021, the Company entered into a sale and purchase agreement to acquire E&I. The E&I Acquisition closed on November 1, 2021. Under the terms of the sale and purchase agreement, total consideration was $1,770.4, net of $10.3 of cash acquired. The gross consideration of $1,780.7, consisted of $1,168.7 in cash, approximately $601.1 of Company common stock, equating to 23.1 million shares of Vertiv common stock, $7.4 of contingent consideration and $3.5 of other adjustments. The Company was obligated to pay up to $200.0 of additional cash consideration if E&I achieved certain EBITDA targets for the year ended December 31, 2022. As of December 31, 2022 the value of the contingent earnout was zero. For the year ended December 31, 2022 the decrease in the fair value of contingent consideration of $3.7 is recorded in “Other operating expense (income)” on the Consolidated Statements of Earnings (Loss).

The Company accounted for the acquisition of E&I using the acquisition method of accounting. Assets acquired and liabilities assumed have been recorded based on their fair values, and as a result, the estimates and assumptions are subject to change. As of December 31, 2022, the Company has finalized the valuations to determine the final purchase price allocation including the final working capital adjustments, amounts allocated to intangible assets, the allocation of fair value to its foreign jurisdictions, and recording the tax effects of the E&I Acquisition.

The following is the final purchase price allocation of assets acquired and liabilities assumed related to the E&I acquisition:

	Preliminary Allocation as of December 31, 2021		Adjustments		Final Allocation as of December 31, 2022
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		4.5		752.7
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		1.0		51.0
Deferred income taxes	129.8		(1.5)		128.3
Other long-term liabilities	24.3		—		24.3
Net assets acquired and liabilities assumed	$	1,765.4	$	5.0	1,770.4

The following table represents the definite lived intangible assets acquired, the final fair values and respective useful lives:

	Useful Life	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 net sales, 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 lives was 14.2 years for finite lived intangible assets.

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. As of the E&I Acquisition closing date, goodwill of $273.6 and $479.1 has been allocated to the America’s and the Europe, Middle East and Africa segments, respectively. Refer to “Note 5 - Goodwill and Other Intangibles” for additional information about goodwill and other intangible assets.

For the year ended December 31, 2021, E&I net sales were $67.4 which are included in “Net sales” and operating loss from the acquisition were $10.0 included in “Income (loss) before income taxes, net” on the Consolidated Statement of Earnings (Loss).

Pro Forma Financial Information

In accordance with ASC 805 Business Combination, the following unaudited pro forma results of operations for the year ended December 31, 2021 assumes the E&I business combination was completed on January 1, 2021. 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	Year Ended December 31, 2021
Net sales	$	5,323.9
Net income (loss)	76.7

The unaudited pro forma results contain adjustments to give effect to pro forma events that are directly attributable to the business transaction, 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 acquisition 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.