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Business Combinations | 9 Months Ended
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Sep. 30, 2023
Business Combinations |
Business Combinations | 11. BUSINESS COMBINATIONS ​ Acquiring businesses is a key part of our ongoing strategy to grow our company and expand our market share. Each acquisition has been accounted for as a business combination under ASC 805, “Business Combinations.” Acquisition related costs were $6.2 million and $9.0 million in the three and nine months ended September 30, 2023, respectively. We incurred no acquisition related costs for the three months ended September 30, 2022 and incurred $1.3 million for the nine months ended September 30, 2022. Acquisition related costs are included in selling, general, and administrative expense in our condensed consolidated statements of operations. ​ On January 26, 2023, we acquired the assets of the residential insulation business of SRI. This installation acquisition enhanced our presence in Georgia, Michigan, Ohio, Florida, Alabama and South Carolina. The purchase price of $45.3 million was funded by cash on hand. ​ On July 10, 2023, we acquired the assets of the residential insulation installer business Rocky Mountain. This installation acquisition enhanced our presence in the Colorado market. The purchase price of $7.2 million was funded by cash on hand. ​ On July 17, 2023, we acquired the assets of the residential insulation business Best. This installation acquisition enhanced our presence in Texas, Arizona, Tennessee, and Florida markets. The purchase price of $95.0 million was funded by cash on hand. ​ The fair values of the assets acquired and liabilities assumed for our 2023 acquisitions are as follows as of September 30, 2023, in thousands: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 2023 Acquisitions
Purchase price fair values: | ​ | SRI | ​ | Rocky Mountain | ​ | Best | ​ | Totals
Accounts receivable | ​ | $ | 5,531 | ​ | $ | 584 | ​ | $ | 7,537 | ​ | $ | 13,652
Inventories | ​ | ​ | 4,383 | ​ | ​ | 267 | ​ | ​ | 2,132 | ​ | ​ | 6,782
Prepaid and other assets | ​ | ​ | 158 | ​ | ​ | — | ​ | ​ | 553 | ​ | ​ | 711
Property and equipment | ​ | ​ | 4,623 | ​ | ​ | 338 | ​ | ​ | 5,518 | ​ | ​ | 10,479
ROU asset (operating) | ​ | ​ | 4,695 | ​ | ​ | 165 | ​ | ​ | 3,441 | ​ | ​ | 8,301
Intangible assets | ​ | ​ | 13,740 | ​ | ​ | 2,399 | ​ | ​ | 30,470 | ​ | ​ | 46,609
Goodwill | ​ | ​ | 23,132 | ​ | ​ | 3,629 | ​ | ​ | 51,213 | ​ | ​ | 77,974
Accounts payable | ​ | ​ | (6,078) | ​ | ​ | (17) | ​ | ​ | (2,623) | ​ | ​ | (8,718)
Lease liabilities (operating) | ​ | ​ | (4,775) | ​ | ​ | (165) | ​ | ​ | (3,241) | ​ | ​ | (8,181)
All other liabilities | ​ | ​ | (95) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (95)
Net assets acquired | ​ | $ | 45,314 | ​ | $ | 7,200 | ​ | $ | 95,000 | ​ | $ | 147,514
​ Estimates of acquired intangible assets related to our 2023 acquisitions are as follows as of September 30, 2023, dollars in thousands: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Estimated Fair Value |  | Weighted Average Estimated Useful Life (Years)
Customer relationships | ​ | $ | 42,399 | ​ | ​ | 12
Trademarks and trade names | ​ | ​ | 4,010 | ​ | ​ | 10
Non-compete agreements | ​ | ​ | 200 | ​ | ​ | 5
Total intangible assets acquired | ​ | $ | 46,609 | ​ | ​ | 12
​ As third-party or internal valuations are finalized, certain tax aspects of the foregoing transactions are completed, and customer post-closing reviews are concluded, adjustments may be made to the fair value of assets acquired, and in some cases total purchase price, through the end of each measurement period, generally one year following the applicable acquisition date. ​ On July 26, 2023, we entered into a definitive agreement to acquire SPI. SPI has 85 branches across the United States and 4 branches in Canada. We expect to fund this $960.0 million transaction with Term Facility Two and cash on hand. The transaction is subject to customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. ​ The table below provides a summary as of September 30, 2023 for the businesses acquired during the nine months ended September 30, 2022, in thousands: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2022 Acquisitions | ​ | Date |  | Cash Paid | ​ | Contingent Consideration | ​ | Goodwill Acquired
Billings | ​ | ​ | 2/3/2022 | ​ | $ | 7,005 | ​ | $ | — | ​ | $ | 3,313
Assured | ​ | ​ | 4/7/2022 | ​ | ​ | 4,719 | ​ | ​ | 600 | ​ | ​ | 3,406
All others | ​ | ​ | Various | ​ | ​ | 3,257 | ​ | ​ | — | ​ | ​ | 1,726
Total | ​ | ​ | ​ | ​ | $ | 14,981 | ​ | $ | 600 | ​ | $ | 8,445
​ Goodwill to be recognized in connection with acquisitions is attributable to the synergies expected to be realized and improvements in the businesses after the acquisitions. Primarily all of the $78.0 million and $8.4 million of goodwill recorded from acquisitions completed in the nine months ended September 30, 2023 and 2022, respectively, is expected to be deductible for income tax purposes.

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