2. Discontinued Operations, Deconsolidation of European Joint Venture, Divestitures and Acquisitions

The Company classifies a business that has been disposed of or is classified as held for sale as a discontinued operation when the criteria prescribed by FASB ASC 205, Presentation of Financial Statements are met. While the 2023 Divestitures did not previously qualify for presentation as discontinued operations, the Company concluded that, in the aggregate, the sales of these businesses along with the 2024 Divestitures (collectively, the “discontinued operations” that are all part of the divestiture plan) met the criteria for discontinued operations presentation as their dispositions represent a strategic shift that has had a major effect on the Company's operations and financial results. As a result, each of these businesses has been reclassified to discontinued operations in the Consolidated Statements of Operations and Comprehensive Loss, Consolidated Balance Sheets and Consolidated Statements of Cash Flows for all periods presented.

As part of the agreements for certain divestitures, the Company has agreed to provide certain transitional services as detailed within respective transition services agreements for a period of time after sale. Income and expenses related to these transitional services are immaterial and are reported in “Net loss from continuing operations” on the Consolidated Statements of Operations and Comprehensive Loss.

The following table presents the summarized balance sheet of discontinued operations. As of December 31, 2024, all businesses that were previously classified as discontinued operations had been fully divested.


(in thousands)	December 31, 2023
Carrying amounts of major classes of assets
Cash and cash equivalents	$	5,641
Accounts receivable, net of allowance for expected credit losses of $2,834		56,848
Prepaid and other current assets		6,839
Property and equipment, net		10,245
Goodwill		160,400
Other intangible assets, net		41,025
Investments in unconsolidated affiliates		564
Other assets		4,040
Total assets of discontinued operations (1)	$	285,602
Carrying amounts of major classes of liabilities
Current portion of long-term debt	$	306
Accounts payable		9,737
Accrued compensation and benefits		5,729
Other accrued expenses		3,210
Deferred revenues		3,137
Long-term debt, net of current portion		4,666
Other liabilities		3,024
Total liabilities of discontinued operations (1)	$	29,809
Total net assets of the disposal group classified as discontinued operations	$	255,793

(1) Certain assets and liabilities from discontinued operations are classified as noncurrent at December 31, 2023 as they did not previously meet the held-for-sale criteria at that date.

The following table presents the summarized statements of operations of discontinued operations.


	Year Ended December 31,
(in thousands)	2024			2023		2022
Revenues	$	80,017		$	324,720	$	403,400
Cost of revenues (exclusive of depreciation and amortization shown separately below)		59,605			245,420		319,691
Selling, general, and administrative expenses		15,816			14,855		12,154
(Gain) loss on divestitures		(95,099	)		19,068		—
Depreciation and amortization		4,695			15,841		17,029
Total operating expenses		(14,983	)		295,184		348,874
Operating income from discontinued operations		95,000			29,536		54,526
Other expenses:
Interest expense		48			68		72
Total other expenses		48			68		72
Income before income taxes from discontinued operations		94,952			29,468		54,454
Provision for income taxes from discontinued operations		41,318			8,639		13,104
Net income from discontinued operations, net of tax		53,634			20,829		41,350
Less: net income (loss) from discontinued operations attributable to noncontrolling interest, net of tax		2,192			594		(546	)
Net income from discontinued operations attributable to stockholders of Advantage Solutions Inc.	$	51,442		$	20,235	$	41,896

The following table provides a summary of the cash flows from discontinued operations:


	Year Ended December 31,
(in thousands)	2024			2023			2022
Net cash provided by operating activities from discontinued operations	$	6,437		$	10,513		$	16,553
Net cash used in investing activities from discontinued operations		(7,304	)		(4,708	)		(7,440	)
Net cash used in financing activities from discontinued operations		(4,362	)		(2,942	)		(10,263	)
Net effect of foreign currency changes on cash from discontinued operations		(412	)		76			(307	)
Net change in cash, cash equivalents and restricted cash from discontinued operations	$	(5,641	)	$	2,939		$	(1,457	)

On January 31, 2024, the Company sold a collection of foodservice businesses, previously classified as held for sale (as current assets) as of December 31, 2023 (collectively with the other businesses disposed during the twelve months ended December 31, 2024, the “2024 Divestitures”). As part of the sale, the foodservice businesses were combined with an entity owned by the buyer, with the Company receiving approximately $91.0 million, subject to working capital adjustments and an ongoing 7.5% interest in the combined business. The ongoing ownership interest represents a continuing involvement which the Company has determined represents an equity method investment. Upon the close of the transaction, the retained 7.5% interest was recognized at fair value of $8.4 million, valued using unobservable inputs (i.e., Level 3 inputs), primarily discounted cash flow.

The investment is reported in “Investments in unconsolidated affiliates” on the Consolidated Balance Sheets and an immaterial amount of equity income (loss) reported in “Income from equity method investments” on the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2024. Transactions between the Company and the combined foodservice entity are considered to be related-party transactions subsequent to the divesture.

During the second quarter of 2024, the Company sold two agencies in the Branded Services segment, one agency in the Experiential Services segment and one agency in the Retailer Services segment. The Company received $65.2 million including estimated working capital adjustments.

On July 31, 2024, the Company completed the sale of the Jun Group business in exchange for proceeds of approximately $185.0 million less any adjustments. The Company received approximately $130.0 million in cash upon completion of the sale. As part of the purchase agreement, the buyer has agreed to remit the remaining consideration of $27.5 million (less $5.0 million estimated adjustments) and $27.5 million, 12 and 18 months, respectively, after the completion of the sale.

During the year ended December 31, 2024, the Company recorded a gain from the 2024 Divestitures of $95.1 million as a component of “Net income from discontinued operations, net of tax” in the Consolidated Statements of Operations and Comprehensive Loss. Proceeds from the sales were classified as cash provided by investing activities from continuing operations in the Consolidated Statements of Cash Flows.

On November 30, 2023 the Company reduced its equity interest in Advantage Smollan Limited (“ASL”), its European joint venture, from a majority interest to a minority interest of 49.6%. The Company also removed certain participating rights with ASL related to capital allocation and certain of the Company’s decision making rights, resulting in a loss of control. Therefore, in accordance with ASC 810, ASL was deconsolidated from the Company’s consolidated financial statements. Effective December 1, 2023, the Company’s investment in ASL is accounted for under the equity method of accounting, with the investment reported in “Investments in unconsolidated affiliates” on the Consolidated Balance Sheets and equity income (loss) reported in “Income from equity method investments” on the Consolidated Statements of Operations and Other Comprehensive Loss. Transactions between the Company and ASL are considered to be related-party transactions from the date of deconsolidation.

The fair value of the Company's continuing investment in ASL of $91.9 million was determined at the date of deconsolidation, recorded within “Investments in unconsolidated affiliates” on the Consolidated Balance Sheets and is assessed for impairment at each reporting period. The estimated fair value of the underlying business was determined based on a combination of the income and market approaches. The income approach utilizes estimates of discounted cash flows for the underlying business, which requires assumptions for growth rates, EBITDA margins, terminal growth rate, discount rate, and incremental net working capital, all of which require significant management judgment. The market approach applies market multiples derived from historical earnings data of selected guideline publicly traded companies. The Company compared a weighted average of the output from the income and market approaches to compute the fair value of ASL. The assumptions in the income and market approach are based on significant inputs not

observable in the market and thus represent Level 3 measurements within the fair value hierarchy (described in Note 1—Organization and Significant Accounting Policies). The difference between the carrying value of the assets and liabilities of ASL that were deconsolidated and the fair value of the continuing investment, as determined at the date of deconsolidation, was $58.9 million, before tax, and this gain on deconsolidation is reflected within the Company’s Consolidated Statements of Operations and Other Comprehensive Loss for the year ended December 31, 2023. As a result of the ASL deconsolidation, the Company determined a triggering event occurred for the sales indefinite-lived trade name and an intangible asset impairment charge of $43.5 million was recorded. As part of the Company derecognizing ASL, the Company attributed $18.2 million of the former Sales reporting unit goodwill to that business, which was derecognized and reflected in the calculated gain on sale. The Company determined that the remaining former Sales reporting unit goodwill was not impaired.

ASL is party to transactions with the Company and its consolidated subsidiaries entered into in the normal course of business and these transactions include corporate expenses for services benefiting ASL. Up to the date of the deconsolidation, these transactions were eliminated on consolidation and had no impact on the Company’s Consolidated Statements of Operations and Comprehensive Loss. After deconsolidating ASL, these transactions are treated as third-party transactions in the Company’s financial statements. The amount of these related-party transactions is included within Note 15—Related Parties.

During the year ended December 31, 2023, the Company recognized a loss on the sale of businesses of $19.1 million, as a component of “Net income from discontinued operations, net of tax” in the Consolidated Statements of Operations and Comprehensive Loss. The Company received $21.1 million of proceeds, net of transaction fees and holdbacks.

The Company acquired four businesses during the year ended December 31, 2022. The acquisitions were accounted for under the acquisition method of accounting. As such, the purchase consideration for each acquired business was allocated to the acquired tangible and intangible assets and liabilities assumed based upon their respective fair values. Assets acquired and liabilities assumed in the business combinations were recorded on the Company’s financial statements as of the acquisition date based upon the estimated fair value at such date. The excess of the purchase consideration over the estimated fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. The results of operations of each acquired business has been included in the Consolidated Statements of Operations and Comprehensive Loss since its respective date of acquisition.

The aggregate purchase price for the acquisitions referenced above was $75.5 million, which includes $74.2 million paid in cash, $0.5 million recorded as contingent consideration liabilities, and $0.8 million recorded as holdback amounts. Contingent consideration payments are determined based on future financial performance and payment obligations (as defined in the applicable purchase agreement) and are recorded at fair value. The maximum potential payment outcome related to the acquisitions was $1.6 million. The goodwill related to the acquisitions represented the value paid for the assembled workforce, geographic presence, and expertise. Of the resulting goodwill relating to these acquisitions, $1.0 million is deductible for tax purposes.

The fair values of the identifiable assets and liabilities of the acquisitions less post-close adjustments related to working capital completed during the year ended December 31, 2022, as of the applicable acquisition dates, are as follows:


(in thousands)
Consideration:
Cash	$	74,206
Holdback		810
Fair value of contingent consideration		510
Total consideration		75,526
Recognized amounts of identifiable assets acquired and liabilities assumed:
Assets
Accounts receivable	$	6,817
Other assets		3,446
Identifiable intangible assets		25,546
Total assets		35,809
Liabilities
Accounts payable		7,363
Deferred tax liabilities and other		8,546
Total liabilities		15,909

Redeemable noncontrolling interest		1,987

Noncontrolling interest		974
Total identifiable net assets		16,939
Goodwill arising from acquisitions	$	58,587

The operating results of the businesses acquired during the year ended December 31, 2022 contributed total revenues of $35.2 million during the year ended December 31, 2022. The Company has determined that the presentation of net income (loss) from the date of acquisition is impracticable due to the integration of the operations upon acquisition.

During the year ended December 31, 2022, the Company incurred $0.8 million in transaction costs related to the acquisitions described above. These costs have been included in “Selling, general, and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Loss.