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Business combinations | 9 Months Ended
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Sep. 30, 2021
Business combinations |
Business combinations | 5. Business combinations ​
(a) | Rouse acquisition
On December 8, 2020, the Company acquired all of the issued and outstanding units of Rouse for a total purchase price of $251,724,000. The Company paid cash consideration of $250,265,000, of which $2,169,000 was placed in escrow. In the second quarter of 2021, the Company received a post-closing release from escrow of $728,000 related to net working capital adjustments, resulting in total net cash consideration paid of $249,537,000. ​ Rouse is a leading provider of construction equipment market data intelligence and performance benchmarking solutions. Rouse provides appraisals to asset-backed lenders and market intelligence and software to rental companies, contractors and dealers to optimize the used equipment sales process, and comparisons of rental rates, utilization, and other key performance metrics to industry benchmarks for rental companies and dealers. The combination of Rouse with the Company is expected to enhance the data analytics and service offerings available to customers. ​ The acquisition was accounted for in accordance with ASC 805, Business Combinations. The following table summarizes the fair value of consideration transferred at the date of acquisition, as well as the final purchase price allocation of the fair value of assets acquired and liabilities assumed. ​
​ | ​ | ​ | ​
​ |  | December 8, 2020
Total cash consideration paid | ​ | $ | 249,537
Equity consideration paid for pre-combination services | ​ |  | 1,459
Final purchase price | ​ | $ | 250,996
​ Rouse purchase price allocation ​
​ | ​ | ​ | ​
​ |  | December 8, 2020
Purchase price | ​ | $ | 250,996
​ | ​ |  |
Assets acquired: | ​ |  |
Cash and cash equivalents | ​ | $ | 226
Trade and other receivables | ​ |  | 4,601
Other current assets | ​ | ​ | 159
Property, plant and equipment | ​ |  | 1,171
Other non-current assets | ​ |  | 3,741
Deferred tax assets | ​ |  | 7,584
Intangible assets | ​ |  | 79,300
​ | ​ |  |
Liabilities assumed: | ​ |  |
Trade and other payables | ​ |  | 5,630
Other non-current liabilities | ​ | ​ | 3,188
Deferred tax liabilities | ​ |  | 936
​ | ​ | ​ | ​
Fair value of identifiable net assets acquired | ​ |  | 87,028
Goodwill acquired on acquisition | ​ | $ | 163,968
​ 5. Business combinations (continued) ​ Rouse purchase price allocation (continued) ​ The following table summarizes the fair values of the identifiable intangible assets acquired: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair value | ​ | Weighted average
Asset | ​ | at acquisition | ​ | amortization period
Customer relationships | ​ | $ | 71,000 | ​ | 15 years
Software and technology assets | ​ | ​ | 7,500 | ​ | 4 years
Trade names and trademarks | ​ | ​ | 800 | ​ | 2 years
Total | ​ | $ | 79,300 | ​ | 13.8 years
​ During the quarter ended March 31, 2021, the Company recorded an adjustment of $603,000 to increase the liabilities assumed and increase the goodwill acquired on acquisition. During the quarter ended June 30, 2021, the Company finalized the net working capital adjustment under the purchase agreement and reduced the purchase price by $728,000. The Company also recorded an adjustment of $1,677,000 to reduce the liabilities assumed on acquisition. These measurement period adjustments, since acquisition, resulted in a total net decrease to goodwill of $1,802,000. ​ The purchase price allocation was finalized on June 30, 2021. At September 30, 2021, $1,169,000 continues to be held in escrow until December 4, 2021 or until such date that a joint decision is made for the funds to be released. ​ Goodwill ​ Goodwill has been assigned and allocated to “Other” for segmented information purposes and is based on an analysis of the fair value of net assets acquired. Goodwill relates to benefits expected from the acquisition of Rouse’s business, its assembled workforce and associated technical expertise, as well as anticipated synergies from the Company’s auction expertise and transactional capabilities to Rouse’s existing customer base. The transaction is considered a taxable business combination and all of the goodwill is deductible for tax purposes. ​ Transactions recognized separately from the acquisition of assets and assumption of liabilities ​ At the date of acquisition, the Company issued 312,193 common shares to certain previous unitholders of Rouse in return for their continuing employment service. The common shares are expected to vest at various vesting dates over a three-year period from the date of acquisition as continuing employment services are provided to the Company. At the date of acquisition, the Company estimated that it will recognize a total fair value of $20,735,000 of share-based continuing employment costs in acquisition-related costs over the vesting period, with an increase to additional paid-in capital, subject to continuing employment of those individuals. As and when the common shares vest, the Company will recognize the fair value of the issued common shares from additional paid-in capital to share capital. During the three month period ended March 31, 2021, one of the previous unitholders of Rouse, who became an employee of the Company after the acquisition, terminated their employment contract, which resulted in the forfeiture of 55,510 shares as no vesting conditions had been achieved and reversal of share based continuing employment costs of $98,000. As a result, at September 30, 2021, the number of common shares expected to vest is 256,683 and the total unrecognized fair value of the share-based continuing employment costs expected to be recognized is $9,191,000 (Note 18). During the quarter ended September 30, 2021, the Company recorded $3,021,000 in acquisition-related costs for legal, advisory, integration and other professional fees, which included $2,707,000 of share-based continuing employment costs. ​ 5. Business combinations (continued) ​
(b) | Euro Auctions acquisition
​ On August 9, 2021, the Company, through its indirect wholly owned subsidiary Ritchie Bros UK. Holdings Ltd, entered into a Sale and Purchase Agreement (“SPA”) pursuant to which it has agreed to purchase Euro Auctions Limited and its subsidiaries, William Keys & Sons Holdings Limited and its subsidiaries, Equipment & Plant Services Ltd, and Equipment Sales Ltd. (collectively, “Euro Auctions”), each being private limited companies incorporated in Northern Ireland (the “Euro Auctions Acquisition”). ​ Under the terms of the SPA, the Company will acquire all of the outstanding shares of Euro Auctions from their existing shareholders for approximately £775,000,000 (approximately $1.04 billion) cash consideration, to be paid on closing. The Euro Auctions acquisition is subject to regulatory clearances and the satisfaction of other customary closing conditions, including obtaining of antitrust clearance in the United Kingdom. Euro Auctions are providers of unreserved auction services in the commercial assets space with operations in the United Kingdom, the United Arab Emirates, Australia and the United States. ​ In connection with the execution of the SPA, the Company also obtained a financing commitment letter (“Commitment Letter”), dated August 8, 2021 from Goldman Sachs Bank USA (“GS Bank”) pursuant to which GS Bank and certain other financial institutions committed to provide a $530 million senior secured revolving credit facility and a $100 million senior secured term loan facility (together, the “Bank Commitments”), and a senior unsecured bridge loan facility up to $1,150 million (the “Bridge Commitment”). On September 21, 2021, the Company amended its existing Credit Agreement (Note 16) and thereby cancelled the Bank Commitments. Further, the Bridge Commitment was reduced by $200 million. The remaining aggregate principal amount of the total financing commitment from GS Bank was reduced from $1,150 million to $950 million. ​ GS Bank is also acting as the Company’s financial adviser with respect to the Euro Auctions Acquisition. Consideration of $15,000,000 is payable to GS Bank in respect of such services, contingent on consummation of the acquisition. GS Bank also agrees to credit (or, at GS Bank’s option, refund) $2,000,000 of the transaction fee, to the extent paid, against any further transaction fee that becomes payable to GS Bank in connection with it acting in connection with a financing transaction as described above. These costs have not been recognized as at September 30, 2021. The fee of $15,000,000 (or $13,000,000, net of any amounts credited) will be expensed as acquisition-related costs when it is recognized. ​ During the quarter ended September 30, 2021, the Company incurred $6,133,000 in acquisition-related expenses for the acquisition of the Euro Auctions. ​ (c) SmartEquip acquisition ​ On September 24, 2021, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) to acquire SmartEquip, a Delaware, United States corporation. SmartEquip has a multi-manufacturer platform that provides customers with real-time service and diagnostic support, dynamically customized, via serial number, to each asset in their fleet, and enables the electronic procurement of parts from original equipment manufacturers and their dealers. On November 2, 2021, the Company closed the acquisition of SmartEquip and issued a total of 63,971 common shares to certain of the former shareholders of SmartEquip. Under the terms of the Merger Agreement, the Company acquired all of the issued and outstanding common shares of SmartEquip for $175,000,000, subject to certain adjustments, including for working capital, indebtedness, and SmartEquip’s transaction expenses. The purchase price was paid in cash, with the exception of a portion of the consideration payable to certain of SmartEquip’s shareholders who are entering into employment agreements with the Company, which was paid in common shares of the Company. During the quarter ended September 30, 2021, the Company incurred $1,101,000 in acquisition-related expenses for the acquisition of SmartEquip. ​

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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