Acquisitions (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table presents summaries of the fair value of the assets acquired and liabilities assumed in the franchisee acquisitions as of the respective acquisition dates:

(in Thousands)	Final Amounts Recognized as of Acquisition Dates
Purchase Price	$	190,167
Add: Settlement of Accounts Receivable from Pre-existing Relationship	5,405
Add: Working Capital Adjustments	155
Aggregate Consideration Transferred	195,727
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
Cash and Cash Equivalents	50
Lease Merchandise	59,616
Property, Plant and Equipment	5,568
Operating Lease Right-of-Use Assets1	4,338
Other Intangibles2	23,322
Prepaid Expenses and Other Assets	1,241
Total Identifiable Assets Acquired	94,135
Accounts Payable and Accrued Expenses	(977		)
Customer Deposits and Advance Payments	(5,156		)
Total Liabilities Assumed	(6,133		)
Goodwill3	107,725
Net Assets Acquired (excluding Goodwill)	$	88,002

¹ As of the respective acquisition dates, the Company had not yet adopted ASC 842. As such, there were no operating lease right-of-use assets or operating lease liabilities recognized within the consolidated financial statements at the time of acquisition. The Company recognized operating lease right-of-use assets and operating lease liabilities for the acquired stores as part of the transition to ASC 842 on January 1, 2019. The Company finalized its valuation of assumed favorable and unfavorable real estate operating leases during 2019, which also impacted the valuation of the Company's customer lease contract and customer relationship intangible assets. As a result, measurement period adjustments of $4.3 million were recorded within operating lease right-of-use assets as net favorable, with a corresponding reduction of $1.2 million within other intangibles, net in our consolidated balance sheet. The adjustment also resulted in the recognition of immaterial adjustments to operating expenses and restructuring expenses, net during 2019 to recognize expense that would have been recorded in prior periods had the favorable lease and intangible assets been recorded as of the acquisition date.

² Identifiable intangible assets are further disaggregated in the table set forth below.

³ The total goodwill recognized in conjunction with the franchisee acquisitions, all of which is expected to be deductible for tax purposes, has been assigned to the Aaron’s Business operating segment. The purchase price exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, primarily due to synergies created from the expected future benefits to the Company’s omnichannel platform, implementation of the Company’s operational capabilities, expected inventory supply chain synergies between the Aaron’s Business and Progressive Leasing, and control of the Company’s brand name in the acquired geographic markets. Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce.

The following table presents a summary of the fair value of the assets acquired and liabilities assumed in the SEI franchisee acquisition:

(In Thousands)	Final Amounts Recognized as of Acquisition Date
Purchase Price	$	140,000
Add: Settlement of Accounts Receivable from Pre-existing Relationship	3,452
Less: Reimbursement for Insurance Costs	(100		)
Add: Working Capital Adjustments	188
Consideration Transferred	143,540
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed
Cash and Cash Equivalents	34
Accounts Receivable	1,345
Lease Merchandise	40,941
Property, Plant and Equipment	8,832
Other Intangibles1	13,779
Prepaid Expenses and Other Assets	440
Total Identifiable Assets Acquired	65,371
Accounts Payable and Accrued Expenses	(6,698		)
Customer Deposits and Advance Payments	(2,500		)
Capital Leases	(4,514		)
Total Liabilities Assumed	(13,712		)
Goodwill2	91,881
Net Assets Acquired (excluding Goodwill)	$	51,659

¹ Identifiable intangible assets are further disaggregated in the table set forth below.

² The total goodwill recognized in conjunction with the SEI acquisition, all of which is expected to be deductible for tax purposes, has been assigned to the Aaron’s Business operating segment. The purchase price exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, primarily due to synergies created from the expected future benefits to the Company’s omnichannel platform, implementation of the Company’s operational capabilities, expected inventory supply chain synergies between the Aaron’s Business and Progressive Leasing, and control of the Company’s brand name in new geographic markets. Goodwill also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce.

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination

The estimated intangible assets attributable to the SEI acquisition are comprised of the following:

	Fair Value (in thousands)		Weighted Average Useful Life (in years)
Non-compete Agreements	$	1,244	5.0
Customer Lease Contracts	2,154		1.0
Customer Relationships	3,215		2.0
Reacquired Franchise Rights	3,640		4.1
Favorable Operating Leases1	3,526		11.3
Total Acquired Intangible Assets2	$	13,779

¹ Upon the adoption of ASC 842 on January 1, 2019, the Company reclassified the remaining favorable operating lease asset from other intangibles, net to operating lease right-of-use assets within its consolidated balance sheets.

² Acquired definite-lived intangible assets have a total weighted average life of 5.1 years.

The intangible assets attributable to the franchisee acquisitions are comprised of the following:

	Fair Value (in thousands)		Weighted Average Useful Life (in years)
Non-compete Agreements	$	1,872	3.0
Customer Contracts	7,457		1.0
Customer Relationships	9,330		3.0
Reacquired Franchise Rights	4,663		3.9
Total Acquired Intangible Assets1	$	23,322

¹ Acquired definite-lived intangible assets have a total weighted average life of 2.5 years.