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Business Combinations | 9 Months Ended
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Sep. 30, 2021
Business Combinations [Abstract] |
Business Combinations | NOTE 4. BUSINESS COMBINATIONS The Company continually evaluates potential acquisitions that strategically fit within the Company’s existing portfolio or expand the Company’s portfolio into a new and attractive business area. Acquisitions are accounted for as business combinations using the acquisition method of accounting. As such, the Company makes a preliminary allocation of the purchase price to the tangible assets and identifiable intangible assets acquired and liabilities assumed. In the months after closing, as the Company obtains additional information about the acquired assets and liabilities and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. Purchase price is allocated to acquired assets and liabilities assumed based upon their estimated fair values as determined based on estimates and assumptions deemed reasonable by the Company. The Company engages third-party valuation specialists to assist with preparation of critical assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed is recorded as goodwill. Goodwill is attributable to the workforce of the acquired businesses, the complementary strategic fit and resulting synergies these businesses bring to existing operations, and the opportunities in new markets expected to be achieved from the expanded platform. 2021 Acquisitions During the nine months ended September 30, 2021, the Company completed the acquisition of Premier Fire & Security, Inc. ("Premier Fire") on July 1, 2021, and included in the Safety Services segment, as well as several other individually immaterial acquisitions. Total purchase consideration for all of the completed acquisitions of $68 consisted of cash paid at closing of $51, net of cash acquired of $4, and accrued consideration of $13. The results of operations of these acquisitions are included in the Company’s unaudited condensed consolidated statement of operations from their respective dates of acquisition. Net revenues and operating income from material acquisitions were $9 and less than $1, respectively, for the nine months ended September 30, 2021. The Company has not finalized its accounting for 2021 acquisitions. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required. Based on preliminary estimates, the total amount of goodwill from the 2021 acquisitions expected to be deductible for tax purposes is $21. See N ote 6 – “Goodwill and Intangibles” for the provisional goodwill assigned to each segment. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the dates of acquisition:
|  | Premier Fire |  |  | Other 2021 Acquisitions |
Cash paid at closing |  | $ | 32 |  |  | $ | 23 |
Accrued consideration |  |  | 7 |  |  |  | 6 |
Total consideration |  | $ | 39 |  |  | $ | 29 |
Cash |  | $ | 3 |  |  | $ | 1 |
Current assets |  |  | 10 |  |  |  | 5 |
Property and equipment |  |  | 1 |  |  |  | 2 |
Intangible assets, net |  |  | 13 |  |  |  | 5 |
Goodwill |  |  | 17 |  |  |  | 18 |
Current liabilities |  |  | (5 | ) |  |  | (2 | )
Noncurrent liabilities |  |  | — |  |  |  | — |
Net assets acquired |  | $ | 39 |  |  | $ | 29 |
On July 26, 2021, the Company entered into an agreement to acquire the Chubb Limited fire and security business from Carrier Global Corporation for an enterprise value of $3,100, which is comprised of $2,900 cash and approximately $200 of assumed liabilities, subject to adjustments at closing. 2020 Acquisitions During 2020, the Company completed the acquisition of SK FireSafety (“SKG”) within the Safety Services segment and a number of other immaterial acquisitions for consideration transferred of $324, which includes a cash payment made at closing of $319, net of cash acquired, and $5 of accrued consideration that may be paid out in 1-2 years from date of acquisition. SKG is a European market-leading provider of commercial safety services with operations primarily in the Netherlands, Belgium, Sweden, Norway, and the United Kingdom. On October 1, 2020, the Company completed the SKG Acquisition and acquired all of the outstanding stock. Through the acquisition of SKG, APG established a European platform for international organic and acquisition expansion. The other acquisitions were primarily in the Safety Services segment and based in the United States. The Company has finalized its accounting for all 2020 acquisitions. During Q2 2021, the Company recorded a measurement period adjustment, primarily related to intangible assets and goodwill, for which the resulting impact to amortization expense was immaterial. Based on final purchase price allocations, the total amount of goodwill from the 2020 acquisitions expected to be deductible for tax purposes is $20. See Note 6 – “Goodwill and Intangibles” for the provisional goodwill assigned to each segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the dates of acquisition:
Cash paid at closing |  | $ | 329 |
Accrued consideration |  |  | 5 |
Total consideration |  | $ | 334 |
Cash |  | $ | 10 |
Current assets |  |  | 76 |
Property and equipment |  |  | 12 |
Customer relationships |  |  | 82 |
Trade names and trademarks |  |  | 16 |
Contractual backlog |  |  | 1 |
Goodwill |  |  | 215 |
Other noncurrent assets |  |  | 14 |
Current liabilities |  |  | (54 | )
Noncurrent liabilities |  |  | (38 | )
Net assets acquired |  | $ | 334 |
Accrued Consideration The Company’s acquisition purchase agreements typically include deferred payment provisions, often to sellers who become employees of the Company. The provisions are made up of three general types of arrangements, contingent compensation and contingent consideration (both of which are contingent on the future performance of the acquired entity) and deferred payments related to indemnities. Contingent compensation arrangements are typically contingent on the former owner’s future employment with the Company, and the related amounts are recognized over the required employment period, which is typically three to five years. Contingent consideration arrangements are not contingent on employment and are included as part of purchase consideration at the time of the initial acquisition and are paid over a three to five year period. The liability for deferred payments is recognized at the date of acquisition based on the Company’s best estimate and is typically payable over a twelve-twenty-four month period. Deferred payments are not contingent on any future performance or employment obligations and can be offset for working capital true-ups, and representations and warranty items. The total contingent compensation arrangement liability was $13 and $39 at September 30, 2021 and December 31, 2020, respectively. The maximum payout of these arrangements upon completion of the future performance periods was $49 and $85, inclusive of the $13 and $39, accrued as of September 30, 2021 and December 31, 2020, respectively. The contingent compensation liability is included in contingent consideration and compensation liabilities in the unaudited condensed consolidated balance sheets for all periods presented. The Company primarily determines the contingent compensation liability based on forecasted cumulative earnings compared to the cumulative earnings target set forth in the arrangement. For one of the Company’s contingent compensation arrangements, the liability is determined based on the Monte Carlo Simulation method. Compensation expense associated with these arrangements is recognized ratably over the required employment period. For additional considerations regarding the fair value of the Company's contingent consideration liabilities, see Note 7 - "Fair Value of Financial Instruments." The total liability for deferred payments was $13 and $16 at September 30, 2021 and December 31, 2020, respectively, and are included in contingent consideration and compensation liabilities in the unaudited condensed consolidated balance sheets for all periods presented.

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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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