Acquisitions

The Company accounts for its acquisitions under the acquisition method, and accordingly the results of operations of the acquired entities are included in the Company’s consolidated financial statements from the acquisition dates. The purchase prices are allocated to the assets acquired based on estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the net assets acquired recorded as goodwill. Purchase accounting adjustments associated with the intangible asset valuations have been recorded as of December 31, 2019 and December 31, 2018. The fair value of acquired intangible assets, primarily related to tradenames and customer relationships, was estimated by applying an income approach. That measure is based on significant Level 3 inputs not observable in the market. Key assumptions were developed based on the Company’s historical experience, future projections and comparable market data including future cash flows, long-term growth rates, implied royalty rates, attrition rates and discount rates.

2019 Acquisitions

Associated Drywall Suppliers, Inc.

On December 30, 2019, the Company acquired the operations and substantially all of the assets of Associated Drywall Suppliers, Inc. (“Associated”). Associated was a distributor of wallboard, metal framing and suspended ceiling systems. Associated operated one branch in the Louisville, Kentucky market.

Joe's Wallboard Supply Co. of Colorado Springs, Inc.

On October 1, 2019, the Company acquired the operations and substantially all of the assets of Joe's Wallboard Supply Co. of Colorado Springs, Inc. (“Wallboard Supply”). Wallboard Supply was a distributor of wallboard and accessories, metal framing, insulation, tools and fasteners. Wallboard Supply operated one branch in Colorado Springs, Colorado.

The Supply Guy, Inc.

On October 1, 2019, the Company acquired the operations and substantially all of the assets of The Supply Guy, Inc. (“TSG”). TSG was a distributor of tools, fasteners, and other related products. TSG operated one branch in Lakewood, Washington.

Select Acoustic Supply Inc.

On May 1, 2019, the Company acquired all of the shares of Select Acoustic Supply Inc. ("Select"). Select was a distributor of wallboard, metal framing, insulation, basement blanket and spray foam. Select operated one branch in the Greater Toronto Area in Ontario, Canada.

Builders' Supplies Limited II

On February 1, 2019, the Company acquired certain assets of Builders' Supplies Limited II and all of the shares of 2168828 Alberta Inc. and 2168829 Alberta Inc. (collectively, "BSL"). BSL was a distributor of specialty building products including wallboard, suspended ceiling systems, metal framing and insulation in the commercial market. BSL operated three branches in the Greater Toronto Area in Ontario, Canada.

For the year ended December 31, 2019, the Company completed five acquisitions ("the 2019 acquisitions") for an aggregate purchase price of $33.8 million, net of cash acquired. The 2019 acquisitions contributed net sales of $25.3 million and income from operations of $1.7 million in the year ended December 31, 2019. The purchase price of the 2019 acquisitions ranged from $3.5 million to $11.3 million all of which were or are subject to normal working capital adjustments. The 2019 acquisitions are not considered material, individually or in aggregate. The following table summarizes, on an aggregate basis, the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date for the 2019 acquisitions summarized above (in thousands):



	Year Ended December 31, 2019
Assets acquired:
Cash	$	89
Accounts receivable	7,690
Other receivables	2,165
Inventories	4,027
Prepaid and other current assets	26
Property and equipment	1,057
Goodwill	9,403
Intangible assets	16,635
Other assets	—
Total assets acquired	41,092
Liabilities assumed:
Accounts payable	(3,905		)
Deferred tax liability	(1,541		)
Accrued expenses and other current liabilities	(1,806		)
Total liabilities assumed	(7,252		)
Total net assets acquired	$	33,840

The excess of purchase price over the fair value amounts assigned to the assets acquired and liabilities assumed represents the goodwill amount resulting from the 2019 acquisitions. Goodwill attributable to the acquisitions has been recorded as a non-current asset and is not amortized, but is subject to review at least on an annual basis for impairment. Goodwill recognized was primarily attributable to expected operating efficiencies and expansion opportunities in the businesses acquired. Goodwill and intangible assets recognized from asset acquisitions are expected to be tax deductible. The Associated, Wallboard Supply, and TSG acquisitions were treated as asset purchases, and the Select acquisition was treated as a stock purchase for tax purposes. The BSL acquisition was a hybrid transaction with both an asset and a stock purchase. Generally, the most significant intangible asset acquired is customer relationships. The Company's acquisitions are generally subject to working capital adjustments; however, the Company does not expect any such adjustments to have a material impact on its consolidated financial statements. Any adjustments to the purchase price allocation of these acquisitions will be made as soon as practicable but no later than one year from the acquisition date. The pro forma impact of the 2019 acquisitions is not presented as the 2019 acquisitions are not considered material to the Company's consolidated financial statements.

2018 Acquisitions

Agan Drywall, Inc., Agan Drywall Supply Rapid City, and Agan Tri-State Drywall Supply, Inc.

On October 1, 2018, the Company acquired the operations and substantially all of the assets of Agan Drywall Supply, Inc., Agan Drywall Supply Rapid City, Inc., and Agan Tri-State Drywall Supply, Inc. (collectively, "Agan"). Agan was a distributor of wallboard, metal framing, insulation and complementary products and operated three branches in South Dakota and Iowa.

Ciesco, Inc. and Commercial Specialty Supply LLC

On August 1, 2018, the Company acquired the operations and substantially all of the assets of Ciesco, Inc. and Commercial Specialty Supply LLC (collectively, "Ciesco"). Ciesco was a distributor of wallboard, metal framing, suspended ceiling systems, insulation and complementary products and operated six branches in Pennsylvania and Virginia.

ArmCom Distributing Company

On February 1, 2018, the Company acquired the operations and substantially all of the assets of ArmCom Distributing Company ("ArmCom"), a division of St. Paul Linoleum and Carpet Company. ArmCom was a distributor of suspended ceiling systems and operated five branches in Minnesota, North Dakota, South Dakota and Nebraska.

RM Supply

On February 1, 2018, the Company acquired all of the stock of RM Supply, Inc. and certain assets of JMB Transportation, L.L.C. (collectively, “RM Supply”). RM Supply was a distributor of wallboard, metal framing, insulation, and wallboard accessories. RM Supply operated two branches in Missouri.

For the year ended December 31, 2018, the Company completed four acquisitions ("the 2018 acquisitions") for an aggregate purchase price of $94.1 million. The 2018 acquisitions contributed net sales of $62.9 million and income from operations of $2.6 million in the year ended December 31, 2018. The purchase price of the 2018 acquisitions ranged from $6.2 million to $49.3 million, some of which were subject to normal working capital adjustments. The 2018 acquisitions are not considered material, individually or in aggregate. The following table summarizes, on an aggregate basis, the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date for the 2018 acquisitions summarized above (in thousands):



	Year Ended December 31, 2018
Assets acquired:
Cash	$	672
Accounts receivable	19,450
Other receivables	1,470
Inventories	11,558
Prepaid and other current assets	73
Property and equipment	9,843
Goodwill	34,314
Intangible assets	25,812
Other assets	74
Total assets acquired	103,266
Liabilities assumed:
Accounts payable	(7,162		)
Deferred tax liability	(1,019		)
Accrued expenses and other current liabilities	(936		)
Total liabilities assumed	(9,117		)
Total net assets acquired	$	94,149

The excess of purchase price over the fair value amounts assigned to the assets acquired and liabilities assumed represents the goodwill amount resulting from the 2018 acquisitions. Goodwill attributable to the acquisitions has been recorded as a non-current asset and is not amortized, but is subject to review at least on an annual basis for impairment. Goodwill recognized was primarily attributable to expected operating efficiencies and expansion opportunities in the businesses acquired. Goodwill and intangible assets recognized from asset acquisitions are expected to be tax deductible. The Ciesco, ArmCom and Agan acquisitions were treated as asset purchases, and the RM Supply acquisition was treated as a stock purchase for tax purposes. Generally, the most significant intangible asset acquired is customer relationships. The Company's acquisitions are generally subject to working capital adjustments; however, the Company does not expect any such adjustments to have a material impact on its consolidated financial statements. Any adjustments to the purchase price allocation of these acquisitions will be made as soon as practicable but no later than one year from the acquisition date. The pro forma impact of the 2018 acquisitions is not presented as the 2018 acquisitions are not considered material to the Company's consolidated financial statements.