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Business Combination
 12 Months Ended
Dec. 31, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combination
4.    BUSINESS COMBINATION
On October 31, 2025, Octave Specialty Group, (the “Company”) completed its previously announced acquisition of ArmadaCorp Capital, LLC (“ArmadaCorp) pursuant to the Membership Interest Purchase Agreement dated October 31, 2025, for total consideration of approximately $250,000 in cash, financed in part with borrowings of $120,000 made concurrent with the acquisition (the “Transaction”).
The acquisition was accounted for as a business combination using the acquisition method of accounting. The Company has finalized its fair value estimates of the acquired asset and assumed liabilities as of December 31, 2025 and no subsequent adjustments will be made within the permitted measurement period as defined by ASC 805.
The following table summarizes the consideration transferred for this acquisition and the estimated fair values of the identified assets acquired and liabilities assumed at the acquisition date:
Fair value of consideration transferred:
Cash
$250,000 
Less: incentive payments(6,491)
Net cash consideration$243,509 
Recognized amounts of assets acquired and liabilities assumed:
Cash and equivalents
$27,549 
Accounts receivable
6,246 
Other assets
4,092 
Intangible assets
146,000 
Goodwill
94,044 
Premium payable
(16,377)
Other liabilities
(18,045)
Total
$243,509 
Incentive payments represent amounts netted against the purchase prince to fund short-term and long-term incentive compensation and retention payments to the management of ArmadaCare.
Goodwill was recorded to reflect the excess purchase consideration over net assets acquired and primarily consists of the future economic benefits that we expect to receive as a result of the acquisition, driven by the value of potential future distribution and carrier relationships and synergies with other Octave business operations. All of the $94,044 of goodwill was assigned to the ID segment. The goodwill is deductible for tax purposes over 15 years.
The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on management’s estimates and assumptions at the time of the acquisitions.
The following table sets forth the estimated fair values of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:
Fair Value
Useful Life in Years
Armada
Customer relationships
$138,000 15.0
Trade names
$8,000 15.0
Total
$146,000 
The customer relationships intangible represents existing relationships ArmadaCorp maintains with a variety of existing distributors and customers across its product. It excludes the value of potential future distribution relationships that may be developed, which is included in goodwill. The trade name intangible represents the rights to the Armada trade name which is well known in the marketplace in which ArmadaCorp operates.
The overall weighted average useful life of the identified amortizable intangible assets acquired is 7.9 years for ArmadaCorp.
The acquired business contributed revenues of $4,998 and net income of $378 to Octave for the period from November 1, 2025, to December 31, 2025. The following unaudited pro forma summary presents consolidated information of Octave as if the business combination had occurred on January 1, 2024.
Year Ended December 31,
Pro forma (unaudited)20252024
Revenues$292,022 $274,816 
Net (loss) from continuing operations$(50,687)$(75,809)
Octave did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and net income.
These pro forma amounts have been calculated after applying Octave's accounting policies and adjusting the results of the acquired company to reflect amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2024 with the consequential tax effects.
In 2025 and 2024, Octave incurred $7,796 and $27,388 of acquisition-related costs. These expenses are included in general and administrative expense on Octave's consolidated statement of comprehensive income (loss) for the years ended December 31, 2025 and 2024. In the table above, these expenses are reflected in the pro forma net income for the years ended December 31, 2025 and 2024.