Acquisitions

9 Months Ended

Sep. 30, 2020

The Company accounts for its acquisitions under the acquisition method, and accordingly, the results of operations of acquired entities are included in the Company’s consolidated financial statements from the acquisition date. Acquisition related costs are expensed as incurred. The purchase price is allocated to the assets acquired and liabilities assumed 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 September 30, 2020. The fair value of acquired intangible assets, primarily related to customer relationships, was estimated by applying a discounted cash flow model. 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. The purchase price allocations for the acquisitions set forth below are preliminary and subject to adjustment as additional information is obtained about facts and circumstances that existed as of the acquisition dates.

During the nine months ended September 30, 2020, the Company completed the following acquisitions:

Marriott Drywall Materials, Inc.

On September 1, 2020, the Company acquired the operations and substantially all of the assets of Marriott Drywall Materials, Inc. (“Marriott”). Marriott was an independent distributor of wallboard, metal framing, and complementary and other products and operated one branch in the greater Milwaukee, Wisconsin area.

Insulation Distributors, Inc.

On February 3, 2020, the Company acquired the operations and certain assets of Insulation Distributors, Inc. (“IDI”) with respect to IDI's two specialty building products branches in Maryland.

During the nine months ended September 30, 2020, the Company completed the Marriott and IDI acquisitions ("2020 Acquisitions") to expand the Company's geographic footprint and product offerings in Wisconsin and Maryland, respectively. These acquisitions amounted to a total of $12.2 million and are not considered material. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the acquisition dates (in thousands):


	Nine Months Ended September 30, 2020
Assets acquired:
Accounts receivable	$	5,230
Inventories	2,690
Property and equipment	2,140
Other assets	18
Intangible assets	2,362
Total assets acquired	12,440
Liabilities assumed:
Accounts payable	(277)
Total liabilities assumed	(277)
Total net assets acquired	$	12,163

Goodwill and intangible assets recognized from asset acquisitions are expected to be tax deductible. 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 acquisitions was not presented as the acquisitions were not considered material to the accompanying consolidated financial statements.