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Acquisitions and Dispositions

12 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions

In the years ended September 30, 2023, 2022 and 2021, the Company completed acquisitions of multiple businesses. 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 are reclassified from goodwill upon the completion of the valuations.

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.

Fiscal Year 2023

For the year ended September 30, 2023, the Company completed the following transactions:

•On October 1, 2022, Taylor Marine Centers, a retail marine dealership with locations in Maryland and Delaware

•On December 1, 2022, Harbor View Marine, a retail marine dealership with locations in Florida and Alabama

•On September 1, 2023, Harbor Pointe Marina, a retail marine dealership with one location in Alabama

Consideration paid for the consummated acquisitions was $42.0 million with $28.9 million paid at closing (net of cash acquired), $10.6 million in non-cash financing and the remaining $2.6 million in estimated payments of contingent consideration. The payments of contingent consideration are part of earnouts from the achievement of certain post-acquisition increases in adjusted EBITDA. As of September 30, 2023, the earnout period for the acquisitions was completed and no contingent consideration payout was achieved.

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:

Summary of Assets Acquired and Liabilities Assumed


($ in thousands)	Total Acquisitions
Accounts receivable	$	286
Inventories	6,424
Prepaid expenses	72
Property and equipment	11,588
Operating lease right-of-use assets	3,820
Identifiable intangible assets	8,800
Goodwill	18,481
Accounts payable	(17)
Accrued expenses	(361)
Customer deposits	(1,013)
Notes payable - floor plan	(2,228)
Operating lease liabilities	(3,820)
Aggregate acquisition date fair value	$	42,032

Consideration transferred	42,032

In connection with the acquisition of Harbor View Marine, an entity affiliated with the Company agreed to acquire the real estate for the two acquired locations, in effect providing non-cash financing. The Company has accounted for this transaction as a sale and leaseback of the properties in our consolidated financial statements. There was no gain or loss recorded as part of the transaction. The leases for the two properties include an initial term of 15 years and two, five-year renewal options. The leases are accounted for as operating leases and are included in the Operating lease right-of-use assets and Operating lease liabilities on the consolidated balance sheets.

Included in our results for the year ended September 30, 2023, the acquisitions contributed $60.9 million to our consolidated revenue and $6.3 million to our (loss) income before income tax expense. Costs related to acquisitions are included in transaction costs and primarily relate to legal, accounting, valuation and other fees, which are charged directly to operations in the accompanying consolidated statements of operations as incurred in the amount of $1.2 million for the year ended September 30, 2023.

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 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:

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.

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, Roscioli 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:


($ 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

The 2023, 2022 and 2021 acquisitions have resulted in the recording of goodwill that is expected to be deductible for tax purposes of $15.9 million, $173.2 million and $55.4 million for the years ended September 30, 2023, 2022 and 2021, respectively.

The following unaudited pro forma results of operations for the years ended September 30, 2023, 2022 and 2021 assumes that all acquisitions were completed on October 1, 2020.


($ in thousands)	2023		2022		2021
Pro forma revenues	$	1,944,304	$	1,939,382	$	1,804,798
Pro forma net (loss) income	$	(37,943)	$	168,704	$	171,523

The amounts have been calculated by applying our accounting policies and estimates. Pro forma net (loss) income has been tax affected based on the Company’s effective tax rate in the historical periods presented.

Dispositions

During the year ended September 30, 2023, the Company completed the following dispositions of a business:

•On September 30, 2023, Roscioli Yachting Center, which was reported in our Dealership reporting segment through the date of the sale. The sale resulted in a pre-tax gain of $0.2 million recorded in Other expense (income) in the consolidated statement of operations

•On September 30, 2023, Lookout Marine, which included two locations and was reported in our Dealership reporting segment through the date of sale. The sale resulted in a pre-tax loss of $1.0 million recorded in Other expense (income) in the consolidated statement of operations

In connection with the disposition of Roscioli Yachting Center, the Company sold the associated real estate. As part of the sale agreement, the Company entered into a lease with the purchasing party for a portion of the location. The Company has accounted for this transaction as a sale and leaseback of the property in our condensed consolidated financial statements. There was no gain or loss recorded as part of the transaction. The lease for the property includes an initial term of 10 years. The lease is accounted for as an operating lease and is included in the Operating lease right-of-use assets and Operating lease liabilities on the condensed consolidated balance sheet.

There were no dispositions of business entities during the years ended September 30, 2022 and 2021.