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Acquisition of FlexBiosys, Inc | 9 Months Ended
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Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
Acquisition of FlexBiosys, Inc. | 3. Acquisition of FlexBiosys, Inc. On April 17, 2023, the Company completed its acquisition of all of the outstanding equity interests in FlexBiosys, pursuant to an Equity Purchase Agreement ("EPA") with FlexBiosys, TSAP Holdings Inc. ("NJ Seller"), Gayle Tarry and Stanley Tarry, as individuals (collectively with NJ Seller, the "Sellers"), and Stanley Tarry, in his capacity as the representative of the Sellers (the "FlexBiosys Acquisition"). FlexBiosys, which is headquartered in Branchburg, New Jersey, offers expert design and custom manufacturing of single-use bioprocessing products and a comprehensive range of products that include bioprocessing bags, bottles, and tubing assemblies. These products will complement and expand our fluid management portfolio of offerings. Consideration transferred The FlexBiosys Acquisition was accounted for as a purchase of a business under ASC 805, "Business Combinations," and the Company engaged a third-party valuation firm to assist with the valuation of FlexBiosys. Under the terms of the EPA, all outstanding equity interests of FlexBiosys were acquired for consideration with a value totaling $41.0 million. The FlexBiosys Acquisition was funded through payment of $29.0 million in cash, which includes $6.3 million deposited in escrow for future payments, the issuance of 31,415 unregistered shares of the Company's common stock totaling $5.4 million and contingent consideration with fair value of approximately $6.6 million. Under the acquisition method of accounting, the assets acquired and liabilities assumed of FlexBiosys were recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company. The fair value of the net assets acquired is estimated to be $14.1 million, the fair value of the intangible assets acquired is estimated to be $12.6 million and the residual goodwill is estimated to be $14.3 million. The estimated consideration and preliminary purchase price information has been prepared using a preliminary valuation. Acquisition-related costs are not included as a component of consideration transferred but are expensed in the periods in which costs are incurred. The Company has incurred $0.9 million of transaction and integration costs associated with the FlexBiosys Acquisition from the date of acquisition to September 30, 2023 with $0.5 million of the transaction and integration costs incurred during the three months ended September 30, 2023. The transaction costs are included in operating expenses in the consolidated statements of comprehensive income for the three and nine months ended September 30, 2023. Fair Value of Net Assets Acquired The preliminary allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date. As of September 30, 2023, the purchase accounting for this acquisition had not been finalized. As additional information becomes available, the Company may further revise its preliminary purchase price allocation during the remainder of the measurement period. Besides tax implications of the purchase price allocation, the final allocation may result in changes to other assets and liabilities. The components and estimated allocation of the purchase price consist of the following (amounts in thousands):
Cash and cash equivalents |  | $ | 1,090 |
Accounts receivable |  |  | 683 |
Inventory |  |  | 667 |
Prepaid expenses and other current assets |  |  | 35 |
Property and equipment |  |  | 12,034 |
Operating lease right of use asset |  |  | 3,537 |
Customer relationships |  |  | 2,530 |
Developed technology |  |  | 9,860 |
Trademark and tradename |  |  | 30 |
Non-competition agreements |  |  | 220 |
Goodwill |  |  | 14,321 |
Other long-term assets |  |  | 10 |
Accounts payable |  |  | (136 | )
Accrued liabilities |  |  | (314 | )
Operating lease liability |  |  | (39 | )
Operating lease liability, long-term |  |  | (3,498 | )
Fair value of net assets acquired |  | $ | 41,030 |
During the third quarter of 2023, the Company recorded an immaterial net working capital adjustment related to the FlexBiosys Acquisition, which is included in goodwill in the table above. Acquired Goodwill The goodwill of $14.3 million represents future economic benefits expected to arise from anticipated synergies from the integration of FlexBiosys into the Company. These synergies include operating efficiencies and strategic benefits projected to be achieved as a result of the FlexBiosys Acquisition. Substantially all of the goodwill recorded is expected to be deductible for income tax purposes. Intangible Assets The following table sets forth the components of the identified intangible assets associated with the FlexBiosys Acquisition and their estimated useful lives:
|  | Useful life |  | Fair Value |
|  |  |  | (Amounts in thousands) |
Customer relationships |  | 12 years |  | $ | 2,530 |
Developed technology |  | 16 years |  |  | 9,860 |
Trademark and tradename |  | 4 years |  |  | 30 |
Non-competition agreements |  | 5 years |  |  | 220 |
|  |  |  | $ | 12,640 |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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