On December 20, 2023, we acquired 100% of the equity interest of Forward Air Final Mile (“FAFM”). FAFM provides residential last mile delivery services and installation of big and bulky goods, with a focus on appliances, throughout the United States. Total consideration for the transaction was $257.2 million. $260.9 million was paid in cash in December 2023 while $3.7 million was received from the seller in the second quarter of 2024 as part of the post-closing true-up of net working capital. The financial results of FAFM, since the date of acquisition, are included in our Logistics segment.

The FAFM acquisition expanded our final mile services to include the delivery and installation of appliances. FAFM provides residential last mile delivery services through a non-asset business model, working with a network of over 350 carriers throughout the country.

The initial accounting for the acquisition of FAFM is incomplete as we, with the support of our valuation specialist, are in the process of finalizing the fair market value calculations of the acquired net assets. Based on refined inputs incorporated into the fair market value calculations during the quarter ended June 30, 2024, we have estimated that the fair value of intangible assets totals $94.7 million as of December 20, 2023. This represents a $39.8 million decrease relative to the initial estimated fair value of the intangible assets and results in a corresponding increase to goodwill. The amounts recorded in the condensed consolidated financial statements related to the FAFM acquisition are preliminary pending finalization of the fair market value analyses, and the measurement period remains open.

The following table summarizes the preliminary allocation of the total consideration to the assets acquired and liabilities assumed as of the date of the acquisition (in thousands):


	December 20, 2023
Accounts receivable trade	$	28,355
Prepaid expenses and other current assets		2,305
Property and equipment		2,792
Right-of-use assets - operating leases		15,258
Other intangibles		94,700
Goodwill		142,122
Other assets		173
Total assets acquired	$	285,705

Accounts payable trade	$	155
Accounts payable other		2,298
Accrued payroll		1,271
Accrued other		9,488
Lease liability - operating leases short-term		5,697
Other long-term liabilities		19
Lease liability - operating leases long-term		9,560
Total liabilities assumed	$	28,488

Total consideration, net	$	257,217

Cash paid, net	$	257,217

The FAFM acquisition was accounted for as a purchase business combination in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed were recorded in the accompanying condensed consolidated balance sheet at their estimated fair values as of December 20, 2023 with the remaining unallocated purchase price recorded as goodwill. The goodwill recognized in the FAFM acquisition was primarily attributable to potential expansion and future development of the acquired business.

Tax history and attributes are not inherited in an equity purchase of this kind, however, the goodwill and other intangibles recognized in this purchase will be fully tax deductible over a period of 15 years.

The components of “Other intangibles” listed in the table above as of the acquisition date are preliminary and are pending finalization of the fair market valuations of the acquired intangibles. Amounts for these components are as follows (in thousands):


							Estimated
			Accumulated		Balance at		Useful
	Amount		Amortization		June 30, 2024		Life
Customer relationships	$	92,500	$	3,854	$	88,646	13 years
Developed technology	$	1,200	$	325	$	875	2 years
Independent service provider network	$	1,000	$	542	$	458	1 year

The above intangible assets are amortized using the straight-line method. Amortization expense related to this acquisition was $1.7 million and $4.3 million for the three months and six months ended June 30, 2024, respectively. The intangible assets have a remaining weighted average useful life of approximately 12.25 years.

Amortization expense related to FAFM for the next five years is expected to be as follows (in thousands):


	Total
2024 (Remainder of year)	$	4,316
2025		7,690
2026		7,115
2027		7,115
2028		7,115

FAFM's actual results are included in our condensed consolidated financial statements since the acquisition date of December 20, 2023. The following unaudited pro forma condensed consolidated results of operations present the effects of FAFM as though it had been acquired as of January 1, 2023 (in thousands, except for per share amounts):


	Three Months Ended		Six Months Ended
	June 30, 2023		June 30, 2023
Revenue	$	1,109,022	$	2,330,644
Net income	$	46,953	$	108,767
Earnings per share
Basic	$	0.73	$	1.68
Diluted	$	0.73	$	1.67

The unaudited pro forma condensed consolidated results for the periods above were prepared using the acquisition method of accounting and are based on the historical financial information of Hub and FAFM. The historical financial information has been adjusted to give effect to the pro forma adjustments that are: (i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The unaudited pro forma condensed consolidated results are not necessarily indicative of what our condensed consolidated results of operations actually would have been had we completed the FAFM acquisition as of January 1, 2023.