Acquisition

6 Months Ended

Jun. 30, 2019

2. Acquisition

On July 2, 2018, the Company completed the acquisition of substantially all the assets of Huen Electric, Inc., an electrical contracting firm based in Illinois, Huen Electric New Jersey Inc., an electrical contracting firm based in New Jersey, and Huen New York, Inc., an electrical contracting firm based in New York (collectively, the “Huen Companies”). The Huen Companies provide a wide range of commercial and industrial electrical construction capabilities under the Company’s C&I segment in Illinois, New Jersey and New York. The total consideration after net asset adjustments of $10.8 million was approximately $57.9 million, which was funded through borrowings under the Company’s credit facility. The Company has finalized the purchase price accounting relating to the acquisition of the Huen Companies. All goodwill and identifiable intangible assets are expected to be tax deductible per applicable Internal Revenue Service regulations.

The purchase agreement also included contingent consideration provisions for margin guarantee adjustments based upon performance subsequent to the acquisition on certain contracts. The contracts were valued at fair value at the acquisition date, causing no margin guarantee estimate or adjustments for fair value. Changes in contract estimates, such as modified costs to complete or change order recognition, have resulted and will continue to result in changes to these margin guarantee estimates. Changes in contingent consideration, subsequent to the acquisition, related to the margin guarantee adjustments on certain contracts of approximately $0.6 million and $1.4 million were recorded in other income for the three and six months ended June 30, 2019, respectively. Future margin guarantee adjustments, if any, are expected to be recognized in 2019. The Company could also be required to make compensation payments contingent on the successful achievement of certain performance targets and continued employment of certain key executives of the Huen Companies. These payments are recognized as compensation expense in the consolidated statements of operations as incurred. For the three and six months ended June 30, 2019, the Company recognized $0.3 million and $0.6 million, respectively, of compensation expense associated with these contingent payments.

The following table summarizes the allocation of the opening balance sheet from the date of the Huen Companies acquisition through June 30, 2019:

(in thousands)	(as of acquisition date) July 2, 2018			Measurement Period Adjustments			Adjusted acquisition amounts as of June 30, 2019

Consideration paid	$	47,082		$	—		$	47,082
Preliminary estimated net asset adjustments		10,749			85			10,834
Total consideration, net of net asset adjustments	$	57,831		$	85		$	57,916

Accounts receivable, net	$	33,903		$	(207	)	$	33,696
Contract assets		10,570			1,010			11,580
Other current and long term assets		88			(11	)		77
Property and equipment		3,188			—			3,188
Intangible assets		—			24,300			24,300
Accounts payable		(9,592	)		(1,274	)		(10,866	)
Contract liabilities		(6,394	)		525			(5,869	)
Other current liabilities		(6,570	)		49			(6,521	)
Net identifiable assets and liabilities		25,193			24,392			49,585
Unallocated intangible assets		9,800			(9,800	)		—
Total acquired assets and liabilities		34,993			14,592			49,585
Fair value of acquired noncontrolling interest		(1,273	)		(7	)		(1,280	)
Goodwill	$	24,111		$	(14,500	)	$	9,611