On January 12, 2018, the Company acquired 100% of the common shares of Lance Camper Mfg. Corp. and its sister company Avery Transport, Inc. (collectively, “Lance” and the “Lance Acquisition”). Lance designs, engineers and manufactures truck campers, towable campers and toy haulers. This acquisition provided the Company a meaningful entrance into the high volume and rapidly growing towables segment of the recreational vehicle market. The final purchase price paid for Lance was $67.3 million ($61.3 million net of $6.0 million cash acquired) and was funded through the Company’s revolving credit facility. Lance is reported as part of the Recreation segment.

The Company also paid an additional $10.0 million to the selling shareholders subsequent to the acquisition date in the form of deferred purchase price payable of $5.0 million on each of the 12- and 24-month anniversary dates of the acquisition date as per the agreement terms. This deferred payment was recognized as an expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income over the period of the agreement. In the first quarter of fiscal year 2019, the Company paid the first $5.0 million of this deferred purchase price to the selling shareholders and paid the second $5.0 million in the second quarter of fiscal year 2020.

The final purchase price allocation resulted in goodwill of $25.5 million, which is deductible for income tax purposes.

On February 1, 2020, the Company acquired substantially all of the assets and liabilities of Spartan Emergency Response (“Spartan ER”), a leading designer, manufacturer and distributor of custom emergency response vehicles, cabs and chassis for the emergency response market, and its brands, from The Shyft Group (NASDAQ: SHYF). Spartan ER is reported as part of the Fire & Emergency segment. The acquisition increases the Company’s market share in several key product categories and provides access to several large new municipalities and regional markets. The initial purchase price for Spartan ER was $54.8 million, subject to an adjustment based on the level of net working capital at closing, as defined in the purchase agreement. The net cash consideration paid at closing was funded through the Company’s ABL credit facility.

During the fourth quarter of fiscal year 2020, the Company finalized the post-close net working capital adjustment and subsequently received $7.5 million from the seller. The preliminary purchase price allocation was updated to reflect the reduction in consideration paid as well as to reflect immaterial measurement period adjustments made to accounts receivable, inventory, and certain other assets acquired and liabilities assumed. These updates resulted in a decrease to the gain on acquisition of $3.3 million, from $11.9 million to $8.6 million, which is included in the Company’s Consolidated Statement of Operations and Comprehensive (Loss) Income for the fiscal year ended October 31, 2020. The measurement period adjustments did not have a material impact on the Company’s fourth quarter results of operations.

Prior to recognizing the gain, the Company reassessed the measurement and recognition of identifiable assets acquired, and liabilities assumed and concluded that the valuation procedures and resulting preliminary measures were appropriate, in all material respects. The Company believes that its ability to negotiate a purchase price lower than the fair market value of the acquired net assets was due to the limited number of strategic buyers that exist in this specific market and the desire of the sellers to exit the business on an accelerated basis. The Company incurred acquisition related costs of $1.6 million, which are included in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for the fiscal year ended October 31, 2020.

As of October 31, 2020, the fair value of the acquired assets, liabilities and gain on acquisition of business, is provisional pending receipt of the final valuation report from a third-party valuation firm and final fair value considerations specific to inventory and warranty reserves. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed for Spartan ER.

Assets:
Accounts receivable, net	$	22.9
Inventories, net		83.3
Other current assets		0.7
Property, plant and equipment		13.6
Right of use assets		6.0
Total assets acquired		126.5
Liabilities:
Accounts payable		5.3
Customer advances		35.3
Accrued warranty		1.3
Other current liabilities		8.7
Short-term lease obligations		0.8
Deferred income taxes		2.9
Long-term lease obligations		5.4
Other long-term liabilities		10.9
Total liabilities assumed		70.6
Net assets acquired		55.9
Consideration paid		47.3
Gain on acquisition of business	$	(8.6	)

Net sales and operating income attributable to Spartan ER for the fiscal year 2020 were $212.4 million and $10.0 million, respectively. In connection with the acquisition, Spartan ER changed its method for recognizing revenue from over-time to point-in-time to align with the Company. The Company determined that it is impracticable to determine the cumulative effect of applying this change retrospectively because records of certain sales transactions are no longer available for all prior periods. Accordingly, the supplemental proforma disclosures required by ASC 805 have been omitted.