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Business Combination

12 Months Ended

Dec. 31, 2025

5. Business Combination

On July 3, 2025, pursuant to the MIPA, a wholly owned subsidiary of the Company agreed to purchase, subject to certain terms and conditions, BPA. The consideration for the sale was $1.00, reflecting the encumbered nature of BPA, which at the time was involved in the Chapter 11 Cases. This transaction, referred to herein as the Business Combination, was subject to certain conditions subsequent, including emergence of BPA and certain of its affiliates from the Chapter 11 Cases, which occurred on July 29, 2025. On July 3, 2025, XBP Europe Holdings, Inc., entered into a Transaction Support Agreement with the BPA Debtors. Pursuant to the Transaction Support Agreement, XBP Europe Holdings, Inc. agreed to, among other things, support the Plan, including seeking stockholder approvals at XBP Europe Holdings, Inc.’s annual shareholder meeting and issuing shares of the Company’s Common Stock, as described in XBP Europe Holdings, Inc.’s definitive proxy statement filed with the SEC on July 15, 2025. On July 29, 2025, BPA consummated the transaction under the Plan and emerged from bankruptcy having satisfied or waived all the conditions set forth in the Plan and therefore, the conditions subsequent to the MIPA were cleared and the acquisition transaction was deemed closed from an accounting perspective on July 29, 2025.

Under ASC 805, Business Combinations, BPA was determined as the accounting acquirer based on the following predominate factors: following the Emergence Date BPA’s former noteholders (who received the Company’s Common Stock as part of the Plan), had the largest portion of voting rights in the Company relative to the owners of the Company’s Common Stock prior to the Emergence Date, following the Emergence Date, the Company’s seven person board of directors has four new individuals nominated by the former noteholders of BPA pursuant to a one time right under the Plan, compared to three individuals remaining from the Company’s board of directors prior to the Emergence Date, and BPA was the significantly larger entity by revenue and by assets. The Company elected to apply business acquisition accounting effective July 31, 2025, to coincide with the timing of its normal accounting period close as well as the Convenience Date used for fresh start accounting of BPA (as discussed above). The Company evaluated the events between July 29, 2025 and July 31, 2025 and concluded that the use of an accounting convenience date of July 31, 2025 did not have a material impact on the results of operations or financial position.

In connection with the Business Combination, certain of Company’s subsidiaries acquired debt facilities totaling $49.0 million outstanding under the Senior Credit Facilities Agreement as discussed in Note 13, Long Term Debt and Credit Facilities. Following the guidance under ASC 805 total fair value of purchase consideration for the transaction was measured at $32.3 million representing the 3,591,555 shares of Common Stock of the Company (the

combined entity XBP Global Holdings, Inc.) previously issued to the stockholders of XBP Europe Holdings, Inc. The Company incurred $0.1 million of equity issuance costs and $0.2 million of debt issuance costs in connection with the Business Combination.

The acquired assets and assumed liabilities of XBP Europe Holdings, Inc. were recorded at their estimated fair values. The purchase price allocation for the Business Combination is preliminary and subject to change within the respective measurement period, which will not extend beyond one year from the acquisition date. Measurement period adjustments will be recognized in the reporting period in which the adjustment amounts are determined.

The following table summarizes the consideration paid for XBP Europe Holdings, Inc. by BPA for accounting purposes and the preliminary fair value of the assets acquired and liabilities assumed as of the Convenience Date, including adjustments made in the last three months of 2025 (measurement period adjustments) with a corresponding change to goodwill.


	Amounts Recognized as of Convenience Date (as previously reported)		Measurement Period Adjustments (a)			Amounts Recognized as of Convenience Date (as adjusted)
Cash and cash equivalents	$	1,485	$	-		$	1,485
Accounts receivable		29,467		-			29,467
Inventory		4,292		-			4,292
Prepaid expenses and other current assets		6,824		2,174	(c)		8,998
Property, plant and equipment		14,156		-			14,156
Right-of-use assets		4,774		-			4,774
Deferred income tax assets		3,177		(2,347)	(c)		830
Related party long term notes receivable		19,864		-			19,864
Other noncurrent assets		944		-			944
Intangible assets, net		38,360		-			38,360
Implied goodwill		55,847		109	(b),(c)		55,956
Total identifiable assets acquired	$	179,190	$	(64)		$	179,126
Liabilities Assumed:
Accounts payable		17,290		-			17,290
Related party payables		4,129		-			4,129
Accrued liabilities		24,946		3,739	(b),(c)		28,685
Accrued compensation and benefits		23,056		-			23,056
Customer deposits		378		-			378
Deferred revenue		5,123		-			5,123
Operating lease liabilities		4,828		-			4,828
Long-term debts		49,014		-			49,014
Related party notes payable		1,597		-			1,597
Deferred tax liabilities		3,525		-			3,525
Pension liabilities (b)		11,141		(3,803)	(b)		7,338
Other long-term liabilities		1,835		-			1,835
Total liabilities assumed	$	146,862	$	(64)		$	146,798
Total Consideration	$	32,328	$	-		$	32,328

(a)	The change in the estimated fair value is primarily to better reflect market participant assumptions about facts and circumstances existing as of the convenience date. The measurement period adjustments did not result from intervening events subsequent to the convenience date.

(b)	As adjusted, comprised of $3.8 million decrease in pension liabilities and $0.7 million increase in accrued liabilities due to pension related adjustments with a resulting $3.1 million decrease in implied goodwill. This measurement period adjustment did not have a material impact on our earnings.

(c)

As adjusted, comprised of $2.2 million increase in prepaid expenses and other current assets due to income tax receivables, $3.0 million increase in accrued liabilities due to income tax payable, $2.3 million decrease in net deferred income tax assets with a resulting $3.2 million increase in implied goodwill. This measurement period adjustment did not have a material impact on our earnings.

The identifiable intangible assets include trade name and trademarks, customer relationships and internally developed software. Trade name and trademarks names were valued using the Income Approach, specifically the RfR method. Customer relationships were valued using the Income Approach, specifically the Multi-Period Excess Earnings method. Internally developed software was valued based on the replacement cost method under the cost approach. All of these intangibles acquired represent a Level 3 measurement as they are based on unobservable inputs reflecting the Company’s management’s own assumptions about the inputs used in pricing the asset or liability at fair value.


	Weighted Average Useful Life
	(in years)		Fair value
Trade name and trademarks		8 years	$	9,030
Customer relationships		13 years		28,840
Internally developed software		5 years		490
			$	38,360

As of the date of the Business Combination, the weighted-average useful life of total identifiable intangible assets acquired in the Business Combination, excluding goodwill, is 11.7 years.

The Company expects to realize revenue synergies, leverage, brand awareness, stronger margins, greater free cash flow generation, and expand its existing sales channels, and utilize the existing workforce. The Company also anticipates opportunities for growth through the ability to leverage additional future services and capabilities. These factors, among others, contributed to a purchase price in excess of the estimated fair value of XBP Europe Holdings, Inc.’s identifiable net assets assumed, and as a result, the Company has recorded goodwill in connection with this acquisition. The Company engaged a third-party valuation firm to aid management in its analysis of the fair value of the assets and liabilities. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. $60.9 million of revenue and $7.1 million of net loss for XBP Europe Holdings, Inc. are included in consolidated revenues and net loss, respectively, in the consolidated statements of operations for the period August 1, 2025 to December 31, 2025.

Transaction Costs

The Company incurred approximately $2.5 million in advisory, legal, accounting and management fees in conjunction with the Business Combination. These costs do not include the legal and other fees paid for the Restructuring as discussed in Note 1, Description of the Business. These costs were expensed as incurred and are included in selling, general and administrative expenses in the consolidated statement of operations for the period August 1, 2025 to December 31, 2025 (Successor).

Pro-Forma Information

Following are the supplemental consolidated results of the Company on an unaudited pro forma basis, as if the acquisition had been consummated on January 1, 2024 for the years ended December 31, 2025 and 2024.


	Year Ended December 31,
	2025		2024
Net Revenue	$	879,629	$	1,017,896
Net Loss		(95,039)		(67,869)

These pro forma results were based on estimates and assumptions which the Company believes are reasonable. They are not the results that would have been realized had the Company been a combined company during the periods presented and are not necessarily indicative of consolidated results of operations in future periods. The pro forma results include adjustments primarily related to purchase accounting adjustments. Acquisition costs and other non-recurring charges incurred are included in the earliest period presented.