Acquisitions

9 Months Ended

Sep. 27, 2019

Bassian

On February 25, 2019, pursuant to an asset purchase agreement, the Company acquired substantially all of the assets of Bassian Farms, Inc. and certain affiliated entities (“Bassian”), a specialty center-of-the-plate distributor based in northern California. The aggregate purchase price for the transaction was approximately $31,777, including $27,990 paid in cash at closing and the issuance of a $4,000 unsecured convertible note, partially offset by the settlement of a net working capital true-up. The Company will also pay additional contingent consideration, if earned, in the form of an earn-out amount which could total $9,000 over a four-year period. The payment of the earn-out liability is subject to the successful achievement of certain gross profit targets. The Company estimated the fair value of this contingent earn-out liability to be $7,822 and $7,450 as of September 27, 2019 and February 25, 2019, respectively. Subsequent to its initial valuation, the Company recorded measurement period adjustments that increased goodwill by $1,818 mainly due to a $3,370 increase in the fair value of the earn-out liability and a $1,441 increase in current liabilities, partially offset by a $3,085 increase in the fair value of other intangible assets.

Customer relationships, non-compete agreements and trademarks are valued at fair value using Level 3 inputs and are being amortized over 15, 5 and 10 years, respectively. Goodwill for the Bassian acquisition will be amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value of acquiring an established center-of-the-plate distributor to grow the Company's center-of-the-plate product category in the West Coast region, as well as any intangible assets that do not qualify for separate recognition. The Company recognized professional fees of $235 in operating expenses related to the Bassian acquisition. The Company reflected net sales of $14,850 and $35,213 for Bassian in its consolidated statement of operations for the thirteen and thirty-nine weeks ended September 27, 2019, respectively. The Company has determined that separate disclosure of Bassian earnings is impracticable due to the commencement of integration of the Bassian business into the Company's operations in the San Francisco market.

The table below sets forth the purchase price allocation of the Bassian acquisition:



	Bassian
Current assets	$	6,657
Customer relationships	15,530
Trademarks	4,610
Non-compete agreements	1,000
Goodwill	13,065
Fixed assets	856
Other assets	10
Current liabilities	(2,501		)
Earn-out liability	(7,450		)
Total consideration	$	31,777