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Acquisitions | 6 Months Ended
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Mar. 31, 2025
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions | Acquisitions 2024 Acquisitions In October 2023, we acquired Clearpath Robotics, Inc., including its industrial division OTTO Motors (Clearpath), a company that specializes in autonomous robotics for industrial applications, headquartered in Ontario, Canada. We recorded assets acquired and liabilities assumed in connection with this acquisition based on their estimated fair values as of the acquisition date of October 2, 2023. The aggregate purchase price allocation is as follows (in millions):
|  | Purchase Price Allocation
Receivables |  | $ | 8 |
Inventory |  | 22 |
Goodwill |  | 283 |
Intangible assets |  | 313 |
All other assets |  | 11 |
Total assets acquired |  | 637 |
Less: Deferred tax liability |  | (9) |
Less: Liabilities assumed |  | (19) |
Net assets acquired |  | $ | 609 |
|  | Purchase Consideration
Cash consideration, net of cash acquired |  | $ | 566 |
Contingent consideration |  | 43 |
Total purchase consideration, net of cash acquired |  | $ | 609 |
Intangible assets identified include $270 million of technology, $41 million of trademarks, and $2 million of customer relationships. We assigned the full amount of goodwill and all other assets acquired to our Intelligent Devices segment. The goodwill recorded represents intangible assets that do not qualify for separate recognition. This goodwill arises because the purchase price for Clearpath reflects a number of factors including the future earnings and cash flow potential for the business and resulting synergies from the business portfolio and industry expertise. We do not expect the goodwill to be deductible for tax purposes. The intangible assets were valued using an income approach, specifically the relief from royalty method and multi-period excess earnings method. The relief from royalty method calculates value based on hypothetical payments that would be saved by owning an asset rather than licensing it. The multi-period excess earnings method is the isolation of cash flows from a single intangible asset and measures fair value by discounting them to present value. These values are considered level 3 measurements under the U.S. GAAP fair value hierarchy. Refer to Note 9 for further information regarding levels in the fair value hierarchy. The key assumption requiring the use of judgement in the valuation of the technology asset was the obsolescence factor, where we estimated a phase out over 12 years; other assumptions included forecasted revenue growth rates and margin and the discount rate. The key assumption requiring the use of judgement in the valuation of the trademarks asset was the weighted average royalty rate of 2.05 percent; other assumptions included forecasted revenue growth rates and the discount rate. The purchase price included up to $50 million in contingent consideration that could have been earned by the sellers if Clearpath achieved revenue targets in two performance periods ending February 29, 2024, and February 28, 2025. We developed various risk-based scenarios and a probability outcome model and determined the fair value to be $43 million as of the acquisition date, which is considered a level 3 measurement under the U.S. GAAP fair value hierarchy. We updated the fair value measures quarterly during the performance periods to reflect actual results and remaining expected contingent consideration that could be earned. The following table presents the fair value of the contingent consideration in the Consolidated Balance Sheet (in millions):
|  | Period ended February 29, 2024 |  | Period ended February 28, 2025 |  | Total
Contingent consideration as of December 31, 2023 |  | $ | 17 |  |  | $ | 26 |  |  | $ | 43 |
Adjustment for earnout achieved for first performance period |  | (7) |  |  | — |  |  | (7) |
Adjustment to fair value |  | — |  |  | (21) |  |  | (21) |
Payment of earnout achieved for first performance period |  | (10) |  |  | — |  |  | (10) |
Contingent consideration as of September 30, 2024 |  | $ | — |  |  | $ | 5 |  |  | $ | 5 |
Adjustment for earnout forfeited for second performance period |  | — |  |  | (5) |  |  | (5) |
Contingent consideration as of March 31, 2025 |  | $ | — |  |  | $ | — |  |  | $ | — |
The consideration for the amount earned for the first performance period was paid during the third quarter of 2024. In November 2023, we acquired Verve Industrial Protection (Verve), a cybersecurity software and services company that focuses specifically on industrial environments. We recorded assets acquired and liabilities assumed in connection with this acquisition based on their estimated fair values as of the acquisition date of November 1, 2023. The aggregate purchase price allocation is as follows (in millions):
|  | Purchase Price Allocation
Receivables |  | $ | 8 |
Goodwill |  | 133 |
Intangible assets |  | 47 |
All other assets |  | 1 |
Total assets acquired |  | 189 |
Less: Liabilities assumed |  | (6) |
Net assets acquired |  | $ | 183 |
|  | Purchase Consideration
Total purchase consideration, net of cash acquired |  | $ | 183 |
We assigned the full amount of goodwill to our Lifecycle Services segment. We expect the goodwill to be deductible for tax purposes. The goodwill recorded represents intangible assets that do not qualify for separate recognition. Pro forma consolidated sales for the three and six months ended March 31, 2024, were $2.1 billion and $4.2 billion, respectively, and the impact on earnings was not material. The preceding pro forma consolidated financial results of operations are as if the preceding 2024 acquisitions occurred on October 1, 2023. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the transaction occurred as of that time. Total sales from all of the above 2024 acquisitions in the three and six months ended March 31, 2024, were $30 million and $47 million, respectively. Total acquisition-related costs and earnings from all of the above 2024 acquisitions in the three and six months ended March 31, 2024, were not material.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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