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Acquisitions
 12 Months Ended
Sep. 30, 2022
Acquisitions [Abstract]  
Acquisitions
4.
Acquisitions
 

In the years ended September 30, 2022 and 2021, the Company completed acquisitions of multiple businesses in the United States. No acquisitions were completed during the year ended September 30, 2020. The results of operations of acquisitions are included in the accompanying consolidated financial statements from the acquisition date. The purchase price of acquisitions was allocated to identifiable tangible assets and intangible assets acquired based on their estimated fair values at the acquisition date, with the excess being allocated to goodwill. Under the acquisition method of accounting, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on the information currently available. Any changes to the value of identifiable intangible assets will be reclassified from goodwill upon the completion of the valuations.



Fiscal Year 2022

For the year ended September 30, 2022, the Company completed the following transactions:




 		•
On October 1, 2021, Naples Boat Mart, a retail marine dealership with one location in Florida


•
On November 30, 2021, T-H Marine Supplies, LLC (“T-H Marine”), a leading provider of branded marine parts and accessories for original equipment manufacturers (“OEMs”) and the aftermarket, with locations in Alabama, Florida, Illinois, Indiana, Oklahoma and Texas


•
On December 1, 2021, Norfolk Marine Company, a retail marine dealership with one location in Virginia


•
On December 31, 2021, a majority interest in Quality Boats, a retail marine dealership with three locations in Florida. The sellers retained a 20%  economic interest in Quality Boats. The Company has the exclusive right, but not obligation, to acquire the remaining 20% interest at any time before January 1, 2027.

• On February 1, 2022, JIF Marine, a leading supplier of stainless steel ladders, dock products and other accessories which is based in Tennessee

•
On March 1, 2022, YakGear, a leading supplier of kayak equipment, paddle sports accessories and boat mounting accessories which is based in Texas

•
On April 1, 2022, Denison Yachting, a leader in yacht and superyacht sales as well as ancillary yacht services, with 20 retail locations in 7 states

•
On August 9, 2022, Ocean Bio-Chem, a leading supplier and distributor of appearance, cleaning, and maintenance products for the marine industry and the automotive, powersports, recreational vehicles, and outdoor power equipment markets with locations in Alabama and Florida.


Consideration paid for the consummated acquisitions was $490.6 million with $459.5 million paid at closing (net of cash acquired), $1.1 million financed through a note payable to the sellers bearing interest at a rate of 4.0% per year, estimated payments of $15.3 million in contingent consideration and the remaining $14.6 million with the issuance of shares of Class A common stock. The notes are payable in one lump sum on December 1, 2024, with interest payments due quarterly. The estimated payments of contingent consideration are part of multiple earnouts varying from the achievement of certain post-acquisition increases in adjusted EBITDA to the generation of acquisition leads for the Company. The acquisition contingent consideration was developed using weighted average projections based on the Company’s historical experience, current forecasts for the industry and current expectations of the ability to generate viable acquisition leads. The minimum payout on acquisition contingent consideration is $5.9 million and the maximum payout is $24.7 million.

The table below summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date, including the goodwill recorded as a result of the transactions:


Fiscal year 2022 Acquisitions:


Summary of Assets Acquired and Liabilities Assumed

($ in thousands)
  
T-H Marine
    
Quality Boats
    
Denison Yachting
    
Ocean Bio-Chem
    
Other Acquisitions
    
Total Acquisitions
  
Accounts receivable
  
$
8,955
    
$
-
    
$
654
    
$
14,989
    
$
1,123
    
$
25,721
  
Inventories
    
19,856
      
5,937
      
1,981
      
24,362
      
9,618
      
61,754
  
Prepaid expenses
    
1,547
      
47
      
2,053
      
1,431
      
338
      
5,416
  
Property and equipment
    
3,896
      
803
      
293
      
32,037
      
1,227
      
38,256
  
Deposits
    
-
      
-
      
126
      
-
      
13
      
139
  
Operating lease right-of-use assets
    
5,960
      
11,877
      
1,221
      
762
      
7,375
      
27,195
  
Identifiable intangible assets
    
105,500
      
31,700
      
16,600
      
59,300
      
11,332
      
224,432
  
Goodwill
    
51,694
      
78,682
      
29,144
      
35,270
      
15,307
      
210,097
  
Accounts payable
    
(3,876
)
    
-
      
(80
)
    
(3,654
)
    
(471
)
    
(8,081
)
Accrued expenses
    
(1,697
)
    
-
      
(252
)
    
(1,817
)
    
(553
)
    
(4,319
)
Customer deposits
    
(394
)
    
(5,047
)
    
(5,524
)
    
(176
)
    
(3,307
)
    
(14,448
)
Deferred tax liabilities
    
-
      
-
      
-
      
(20,141
)
    
(751
)
    
(20,892
)
Long-term debt
    
-
      
-
      
-
      
(8,150
)
    
-
      
(8,150
)
Operating lease liabilities
    
(5,960
)
    
(11,877
)
    
(1,221
)
    
(762
)
    
(7,375
)
    
(27,195
)
Aggregate acquisition date fair value
  
$
185,481
    
$
112,122
    
$
44,995
    
$
133,451
    
$
33,876
    
$
509,925
  
                                                 
Consideration transferred
    
185,481
      
92,811
      
44,995
      
135,281
      
33,876
      
492,444
  
Cash acquired
    
-
      
-
      
-
      
(1,829
)
    
-
      
(1,829
)
Fair value of non-controlling interests
    
-
      
19,311
      
-
      
-
      
-
      
19,311
  
Aggregate acquisition date fair values
  
$
185,481
    
$
112,122
    
$
44,995
    
$
133,451
    
$
33,876
    
$
509,925
  


The fair value of the non-controlling interest of Quality Boats as of the acquisition date was estimated using the discounted cash flow method and market multiple method. Significant inputs to the discounted cash flows included estimated future revenues and discount rates. Significant inputs to the market multiple method include the peer public company group and the financial performance of reporting units related to the peer public company group.



The fair values of the developed technology and trade name intangible assets as of the acquisition date were determined using the relief from royalty model. The fair values of the customer relationship intangible assets as of the acquisition date were determined using the discounted cash flow method.



The acquisitions of Denison Yachting, Ocean Bio-Chem., and Star Brite Europe, Inc. are preliminary. The valuation of the identifiable intangible assets for Ocean Bio-Chem. and Star Brite Europe, Inc. are preliminary pending receipt of final valuation analyses. The valuation of tangible assets and assumed liabilities are preliminary for Denison Yachting, Ocean Bio-Chem., and Star Brite Europe, Inc. as the acquisitions are subject to certain customary closing and post-closing adjustments.



Included in our results for the year ended September 30, 2022, the acquisitions contributed $275.3 million to our consolidated revenue and $41.1 million to our income before income tax expense. Costs related to acquisitions are included in transaction costs and primarily relate to legal, accounting, and valuation fees, which are charged directly to operations in the accompanying consolidated statements of operations as incurred in the amount of $7.5 million for the year ended September 30, 2022.

Fiscal Year 2021

For the year ended September 30, 2021, the Company completed the following transactions:



 		•
On December 1, 2020, Tom George Yacht Group a retail marine dealership with two locations in Florida

•
December 31, 2020, Walker Marine Group a retail marine dealership with five locations in Florida.

•
On December 31, 2020, Rosioli Yachting Center, a full-service marina and yachting facility, with one location in Florida

•
On August 1, 2021, Stone Harbor Marina a retail marine dealership with one location in New Jersey

•
On September 1, 2021, PartsVu, an online marketplace for OEM marine parts, electronics and accessories with a warehouse in Florida


Consideration paid for the consummated acquisitions was $122.1 million with $107.5 million paid at closing (net of cash acquired), $2.1 million financed through a note payable to the sellers, estimated payments of $9.2 million in contingent consideration, $1.9 million in accrued purchase consideration and the remaining $1.5 million with the issuance of shares of Class A common stock. The estimated payments of contingent consideration are part of multiple earnouts subject to the achievement of certain post-acquisition increases in adjusted EBITDA. The acquisition contingent consideration was developed using weighted average projections based on the Company’s historical experience with acquisitions as well as current forecasts for the industry. The minimum payout on acquisition contingent consideration is $0.2 million and the maximum payout is unlimited.

The table below summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date, including the goodwill recorded as a result of the transactions:

Fiscal year 2021 Acquisitions:

($ in thousands)
  
Walker Marine Group
    
Roscioli Yachting Center
    
Other Acquisitions
    
Total Acquisitions
  
Accounts receivable
  
$
129
    
$
-
    
$
390
    
$
519
  
Inventories
    
8,481
      
87
      
10,476
      
19,044
  
Prepaid expenses
    
39
      
1
      
180
      
220
  
Property and equipment
    
503
      
41,300
      
700
      
42,503
  
Identifiable intangible assets
    
8,520
      
1,530
      
13,940
      
23,990
  
Goodwill
    
26,927
      
2,993
      
25,512
      
55,432
  
Accounts payable
    
(213
)
    
(180
)
    
-
      
(393
)
Accrued expenses
    
-
      
(185
)
    
(47
)
    
(232
)
Customer deposits
    
(3,033
)
    
-
      
(2,248
)
    
(5,281
)
Notes payable – floor plan
    
(7,563
)
    
-
      
(6,134
)
    
(13,697
)
Aggregate acquisition date fair value
  
$
33,790
    
$
45,546
    
$
42,769
    
$
122,105
  
                                 
Consideration transferred
    
33,790
      
45,546
      
42,769
      
122,105
  
Aggregate acquisition date fair values
  
$
33,790
    
$
45,546
    
$
42,769
    
$
122,105
  


 The 2022 and 2021 acquisitions have resulted in the recording of goodwill that is expected to be deductible for tax purposes of $144.0 million and $55.4 million for the years ended September 30, 2022 and 2021, respectively.


The following unaudited pro forma results of operations for the years ended September 30, 2022, 2021 and 2020 assumes that all acquisitions were completed on October 1, 2019.

($ in thousands)
  
2022
    
2021
     2020  
Pro forma revenues
  
$
1,885,896
    
$
1,755,678
    
$
1,514,417
  
Pro forma net income
  
$
161,902
    
$
165,198
    
$
80,866