2. ACQUISITIONS

Dynamic Controls

On March 7, 2020, the Company acquired 100% of the issued and outstanding share capital of the Dynamic Controls Group (“Dynamic Controls”), a wholly owned subsidiary of Invacare Corporation, a market-leading designer and manufacturer of equipment for the medical mobility and rehabilitation markets. The purchase price was funded using borrowings under the Amended Revolving Facility (Note 10). The purchase price is subject to adjustments based on a determination of closing net working capital.

Dynamic Controls brings strong leadership and a very experienced electronics and software engineering design team, providing market leading electronic control solutions and products that will further strengthen the Company’s medical market position, as well as enable it to further develop higher level solutions with embedded electronics across our other major served markets.

The Company incurred $247 of transaction costs related to the acquisition of Dynamic Controls in the three months ended March 31, 2020, which are included in business development expenses on the condensed consolidated statements of income and comprehensive income. The Company accounted for the acquisition pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, “Business Combinations.”

The preliminary allocation of the purchase price paid for Dynamic Controls is based on estimated fair values of the assets acquired and liabilities assumed of Dynamic Controls as of March 7, 2020 is as follows (in thousands):


Cash and cash equivalents	$	11,437
Accounts receivable		4,129
Inventory		3,329
Other assets, net		769
Property, plant and equipment		1,185
Right of use assets		2,692
Intangible assets		7,800
Goodwill		6,820
Current liabilities		(7,269)
Lease liabilities		(2,707)
Net deferred income tax liabilities		(2,207)
Total purchase consideration	$	25,978

The allocation of the purchase price is preliminary as the valuation of both the tangible and identifiable intangible assets and liabilities is being finalized.

The intangible assets acquired consist of customer lists, technology and a trade name, which are being amortized over 16, 13 and 18 years, respectively. Goodwill generated in the acquisition is related to the assembled workforce, synergies between Allied Motion’s other operations and Dynamic Controls that are expected to occur as a result of the combined engineering knowledge, the ability of each of the operations to integrate each other’s products into more fully integrated system solutions and Allied Motion’s ability to utilize Dynamic Controls’ management knowledge in providing complementary product offerings to the Company’s customers.

The operating results of this acquisition are included in our condensed consolidated financial statements beginning on the date of the acquisition. Included within the condensed consolidated statement of income and comprehensive income for the three months ended March 31, 2020, revenues related to Dynamic Controls were $2,500 and earnings related to the operations of Dynamic Controls were $125. Unaudited pro forma revenues, assuming the acquisition occurred on January 1, 2019, would have been $97,500 and $101,900 for the three months ended March 31, 2020 and 2019, respectively. Pro forma earnings and diluted earnings per share are not materially different than actual reported results for each of those periods due to the inclusion of purchase accounting adjustments. The pro forma amounts do not reflect adjustments for anticipated operating efficiencies that the Company expects to achieve as a result of this acquisition. The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would actually have been had these transactions actually occurred on the date presented or to project the combined company’s results of operations or financial position for any future period.

The goodwill resulting from the Dynamic Controls acquisition is not tax deductible.