Business Combinations (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Aggregate Purchase Consideration

The following table summarizes the allocation of consideration to the identifiable assets acquired and liabilities assumed by the Company, with the excess of purchase price over the fair value of Ingersoll Rand Industrial’s net assets recorded as goodwill. The initial accounting for the acquisition is substantially complete and no material changes are anticipated.


Purchase Price	Estimated Fair Value, as Previously Reported		Measurement Period Adjustments(4)		Estimated Fair Value, as Adjusted
Fair value of Ingersoll Rand common stock issued for Ingersoll Rand Industrial outstanding common stock(1)	$	6,919.5	$	—	$	6,919.5
Fair value attributable to pre-merger service for replacement equity awards(2)	8.6		—		8.6
Fair value attributable to pre-merger service for deferred compensation plan(3)	8.9		—		8.9
Total purchase consideration	$	6,937.0	$	—	$	6,937.0
Purchase Price Allocation
Cash	$	41.3	$	(2.5)	$	38.8
Accounts receivable	579.9		8.5		588.4
Inventories	576.2		50.7		626.9
Other current assets	136.9		(49.7)		87.2
Property, plant and equipment	520.0		(3.5)		516.5
Goodwill	4,278.2		607.7		4,885.9
Intangible assets	4,501.3		(734.7)		3,766.6
Other noncurrent assets	269.8		1.1		270.9
Total current liabilities, including current maturities of long-term debt of $19.0 million	(830.6)		78.1		(752.5)
Deferred tax liability	(900.6)		66.9		(833.7)
Long-term debt, net of debt issuance costs and an original issue discount	(1,851.7)		—		(1,851.7)
Other noncurrent liabilities	(310.4)		(22.6)		(333.0)
Noncontrolling interest	(73.3)		—		(73.3)
	$	6,937.0	$	—	$	6,937.0

(1)Represents the fair value of 211,023,522 shares of the Company’s common stock issued for Ingersoll Rand Industrial outstanding common stock multiplied by $32.79, the price per share of common stock as of the closing price on February 28, 2020.

(2)Represents the fair value of the replacement equity awards to the extent those related to services provided by the employee of Ingersoll Rand Industrial prior to closing. See Note 17 “Stock-Based Compensation Plans” for additional information about the replacement equity awards.

(3)Represents the fair value of the deferred compensation plan liabilities that must be settled in shares of the plan sponsor's common stock. See Note 11 “Benefit Plans” for additional information on assumed deferred compensation plan liabilities.

(4)The measurement period adjustments were to refine fair value measurements of intangible assets and carrying amounts of certain assets and liabilities, as well as adjustments to related deferred tax liabilities.

Schedule of Preliminary Fair Value of Property, Plant and Equipment

The fair value of property, plant and equipment was primarily calculated using replacement costs adjusted for the age and condition of the asset, with the exception of real property which was calculated using the market approach, and is summarized below.


Land and buildings	$	215.1

Machinery and equipment	256.9
Office furniture and equipment	13.4
Other	1.0
Construction in progress	30.1
Total property, plant and equipment	$	516.5

Schedule of Estimated Preliminary Fair Value and Weighted Average Useful Life of Identifiable Intangible Assets

The fair value and weighted average useful life of the Ingersoll Rand Industrial identifiable intangible assets are as follows.


	Fair Value		Weighted Average Useful Life (Years)
Tradenames(1)	$	1,312.0	Indefinite
Developed technology(2)	236.0		7
Customer relationships(3)	2,101.0		13
Backlog(4)	81.2		<1
Other(5)	36.4		2
Total identifiable intangible assets	$	3,766.6

(1)Tradenames were identified from brands of Ingersoll Rand Industrial. The fair value of tradenames were determined using a relief from royalty methodology which estimates the cost savings generated by a company related to the ownership of an asset for which it would otherwise have had to pay royalties or license fees on revenues earned through the use of the asset. The discount rate used was determined at the time of measurement based on an analysis of the implied internal rate of return of the transaction, weighted average cost of capital and weighted average return on assets. Tradenames are expected to have an indefinite useful life.

(2)Developed technology was identified from the products of Ingersoll Rand Industrial. Fair values were determined using a relief from royalty methodology with similar methodology and assumptions as described in the tradename description above. The economic useful lives were determined based on the technology cycle related to each developed technology, as well as the cash flows over the forecast period.

(3)Customer relationships represent the fair value of existing relationships with the Ingersoll Rand Industrial customers. Their fair values were determined using the Multi-Period Excess Earning Method which involves isolating the net earnings attributable to the asset being measured based on present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. This method includes a valuation of the assembled workforce, using the Cost Approach, for purposes of calculating contributory asset charges to be used in the Multi-Period Excess Earning Method valuations. The economic useful lives were determined based on historical customer attrition rates.

(4)Backlog primarily relates to the dollar value of purchase arrangements with customers, effective, as of a given point in time, that are based on mutually agreed terms which, in some cases, may still be subject to completion of written documentation and may be changed or cancelled by the customer, often without penalty. Ingersoll Rand Industrial’s backlog consists of these arrangements

with assigned shipment dates expected, in most cases, within three to twelve months. The fair value were determined using the Multi-Period Excess Earning Method. The economic useful lives were based on the time to fulfill the outstanding order backlog obligation.

(5)Other intangible assets is primarily comprised of software.

Schedule of Pro Forma Information

The following unaudited pro forma financial information summarizes the combined results of operations for the Company and Ingersoll Rand Industrial as if the acquisition had been completed on January 1, 2019. The pro forma results have been prepared for comparative purposes only and do not necessarily represent what the revenue or results of operations would have been had the acquisition been completed on January 1, 2019. In addition, these results are not intended to be a projection of future operating results and do not reflect synergies that might be achieved.


	2020		2019
Revenues	$	5,398.0	$	6,146.5
Net Income (Loss)	164.8		101.1

Schedule of Material and Nonrecurring Adjustments to Unaudited Pro Forma Results

The table below reflects the impact of material and nonrecurring adjustments to the unaudited pro forma results for the years ended December 31, 2020 and 2019 that are directly attributable to the acquisition.


	2020		2019
Increase (decrease) to revenue as a result of deferred revenue fair value adjustment, net of tax	$	13.8	$	(13.8)
Increase (decrease) to expense as a result of inventory fair value adjustment, net of tax	(89.6)		89.6
Increase (decrease) to expense as a result of transaction costs, net of tax	(34.8)		34.8