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Plateau Acquisition | 12 Months Ended
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Dec. 31, 2020
Business Combinations [Abstract] |
Plateau Acquisition |
3. | PLATEAU ACQUISITION
General—On October 2, 2019, Sterling consummated the acquisition (the “Plateau Acquisition”) of all of the issued and outstanding shares of capital stock of LK Gregory Construction, Inc. and Plateau Excavation, Inc., and all of the issued and outstanding equity interests in DeWitt Excavation, LLC. The Plateau Acquisition was accounted for using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Purchase Consideration—Sterling completed the Plateau Acquisition for a purchase price of $427,533, net of cash acquired, detailed as follows:
Cash consideration transferred, net of $2,425 of cash acquired | $ | 375,000 |
Target working capital adjustment | 21,323
Equity consideration transferred (1,245 shares at $13.01 per share(1)) | 16,195
Note payable to seller (See Note 9 - Debt) | 10,000
Tax basis election | 5,015
Total consideration | $ | 427,533 |
(1) Sterling’s closing stock price on October 1, 2019 Purchase Price Allocation—The aggregate purchase price noted above was allocated to the assets and liabilities acquired based upon their estimated fair values at the acquisition closing date, which were based, in part, upon an external appraisal and valuation of certain assets, including specifically identified intangible assets. The excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired totaling $106,784 was recorded as goodwill. The following table summarizes our purchase price allocation at the acquisition closing date, net of cash acquired:
Net tangible assets: |
Accounts receivable | $ | 61,110 |
Contract assets | 13,035 |
Other current assets | 249 |
Property and equipment, net | 65,492 |
Other non-current assets, net | 10 |
Accounts payable | (22,039) |
Contract liabilities | (7,790) |
Other current and non-current liabilities | (7,918) |
Total net tangible assets | 102,149 |
Identifiable intangible assets | 218,600 |
Goodwill | 106,784 |
Total consideration transferred | $ | 427,533 |
Identifiable Intangible Assets—Intangible assets identified as part of the Plateau Acquisition are reflected in the table below and are recorded at their estimated fair value, as determined by the Company’s management, based on available information which includes a valuation from external experts. The estimated useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows.
| Weighted Average Life (Years) |  | October 2, 2019 Fair Value
Customer relationships | 25 |  | $ | 191,800 |
Trade name | 25 |  | 24,800 |
Non-compete agreements | 5 |  | 2,000 |
Total |  |  | $ | 218,600 |
Supplemental Pro Forma Information (Unaudited)—The following unaudited pro forma combined financial information (“the pro forma financial information”) gives effect to the Plateau Acquisition, accounted for as a business combination using the purchase method of accounting. The pro forma financial information reflects the Plateau Acquisition and related events as if they occurred at the beginning of the period, and gives effect to pro forma events that are: directly attributable to the acquisition, factually supportable and expected to have a continuing impact on the combined results of Sterling and Plateau following the Plateau Acquisition. The pro forma financial information includes adjustments to (1) exclude transaction costs that were included in historical results and are expected to be non-recurring, (2) include additional intangibles amortization and net interest expense associated with the Plateau Acquisition and (3) include the pro forma results of Plateau for the years ended December 31, 2019 and 2018. This pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the pro forma events taken place on the dates indicated. Further, the pro forma financial information does not purport to project the future operating results of the combined company following the Plateau Acquisition.
| Years Ended December 31,
| 2019 |  | 2018
Pro forma revenue | $ | 1,358,736 |  |  | $ | 1,326,854 |
Pro forma net income attributable to Sterling (1) | $ | 90,408 |  |  | $ | 54,282 |
(1) Pro forma net income attributable to Sterling does not include any non-cash income tax expense, as we had a valuation allowance in 2018 and 2019. Additionally, in 2019 we had a reversal of the valuation allowance on our net deferred tax assets. See Note 13 - Income Taxes for a further discussion of the reversal.

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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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