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Acquisitions

12 Months Ended

Dec. 31, 2021

8. ACQUISITIONS

The Company recognizes, separately from goodwill, the identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. The Company measures and recognizes goodwill as of the acquisition date as the excess of: (a) the aggregate of the fair value of consideration transferred, the fair value of the noncontrolling interest in the acquiree (if any) and the acquisition date fair value of the Company’s previously held equity interest in the acquiree (if any), over (b) the fair value of net assets acquired and liabilities assumed. If information about facts and circumstances existing as of the acquisition date is incomplete by the end of the reporting period in which a business combination occurs, the Company will report provisional amounts for the items for which the accounting is incomplete. The measurement period ends once the Company receives the information it was seeking; however, this period will not exceed one year from the acquisition date. Any material adjustments recognized during the measurement period will be reflected prospectively in the period the adjustment is identified in the consolidated financial statements. The Company recognizes acquisition-related transaction costs as expense.

The Company acquired 30 individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the year ended December 31, 2021. The purchase consideration recorded during this period for nine of the acquired businesses included contingent consideration based upon the receipt of contract assignments and the achievement of certain targets, including future asset and revenue growth. The fair value of the total contingent consideration recorded during the year ended December 31, 2021 of $31,616 was determined using probability assessments of the expected future cash flows over a one to two year period in which the obligations are expected to be settled, and applying an average discount rate of 1.5%. As of December 31, 2021, the obligations recognized at the purchase date have not materially changed. Any changes in the fair value of the contingent consideration subsequent to the acquisition date

will be charged or credited to expense until the contingency is settled. The total transaction-related expenses incurred during the year ended December 31, 2021 for these acquisitions was $11,318. These expenses are included in Selling, general and administrative expenses in the Company’s Consolidated Statements of Net Income.

The Company acquired 21 individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the year ended December 31, 2020. The total transaction-related expenses incurred during the year ended December 31, 2020 for these acquisitions were $9,803. These expenses are included in Selling, general and administrative expenses in the Company’s Consolidated Statements of Net Income.

The Company acquired 21 individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the year ended December 31, 2019. The purchase consideration recorded during this period for five of the acquired businesses included contingent consideration based upon the achievement of certain targets, including future asset and revenue growth. The fair value of the total contingent consideration recorded during the year ended December 31, 2019 of $14,038 was determined using probability assessments of the expected future cash flows over a one to four year period in which the obligations are expected to be settled, and applying an average discount rate of 2.3%. During the year ended December 31, 2020, the fair value of an obligation based upon future asset growth increased $3,327. Any subsequent changes in the fair value of the contingent consideration recorded for these acquisitions will be charged or credited to expense until the contingency is settled. The total transaction-related expenses incurred during the year ended December 31, 2019 for these acquisitions was $12,335. These expenses are included in Selling, general and administrative expenses in the Company’s Consolidated Statements of Net Income.

The results of operations of the acquired businesses have been included in the Company’s consolidated financial statements from their respective acquisition dates. The Company expects these acquired businesses to contribute towards the achievement of the Company’s strategy to expand through acquisitions. Goodwill acquired is attributable to the synergies and ancillary growth opportunities expected to arise after the Company’s acquisition of these businesses.

The following table summarizes the consideration transferred to acquire these businesses and the amounts of identifiable assets acquired and liabilities assumed at the acquisition dates for the acquisitions consummated in the years ended December 31, 2021, 2020 and 2019:


	2021		2020		2019
	Acquisitions		Acquisitions		Acquisitions
Fair value of consideration transferred:
Cash	$	960,449	$	388,789	$	736,610
Debt assumed		108,345		91,349		95,809
Change in open working capital settlements at year end		—		1,505		5,272
		1,068,794		481,643		837,691

Recognized amounts of identifiable assets acquired and liabilities assumed associated with businesses acquired:
Accounts receivable		33,236		13,759		25,220
Prepaid expenses and other current assets		4,866		4,509		4,970
Operating lease right-of-use assets		5,972		5,247		3,616
Property and equipment		394,687		173,394		294,037
Long-term franchise agreements and contracts		134,827		59,149		78,312
Indefinite-lived intangibles		9,557		13,465		—
Customer lists		75,612		48,512		52,422
Permits and other intangibles		116,967		10,507		48,141
Other assets		77		389		7
Accounts payable and accrued liabilities		(37,827)		(14,174)		(19,209)
Current portion of operating lease liabilities		(1,370)		(509)		(658)
Deferred revenue		(8,389)		(1,821)		(17,245)
Contingent consideration		(31,616)		(4,688)		(14,038)
Long-term portion of operating lease liabilities		(4,602)		(4,738)		(2,958)
Other long-term liabilities		(13,976)		(2,136)		(8,707)
Deferred income taxes		(63,822)		(4,525)		(13,287)
Total identifiable net assets		614,199		296,340		430,623
Goodwill	$	454,595	$	185,303	$	407,068

Goodwill acquired in 2021 totaling $187,287 is expected to be deductible for tax purposes. Goodwill acquired in 2020 totaling $169,147 is expected to be deductible for tax purposes. Goodwill acquired in 2019 totaling $266,310 is expected to be deductible for tax purposes.

The fair value of acquired working capital related to 19 individually immaterial acquisitions completed during the year ended December 31, 2021, is provisional pending receipt of information from the acquirees to support the fair value of the assets acquired and liabilities assumed. Any adjustments recorded relating to finalizing the working capital for these 19 acquisitions are not expected to be material to the Company’s financial position.

The gross amount of trade receivables due under contracts acquired during the year ended December 31, 2021, was $36,645, of which $3,409 was expected to be uncollectible. The gross amount of trade receivables due under contracts acquired during the year ended December 31, 2020, was $13,854, of which $95 was expected to be uncollectible. The gross amount of trade receivables due under contracts acquired during the year ended December 31, 2019, was $27,297, of which $2,077 was expected to be uncollectible. The Company did not acquire any other class of receivable as a result of the acquisition of these businesses.