Business Combinations

The Company completed four business combinations for an aggregate purchase price of $59.7 million during the three months ended March 31, 2020. In accordance with ASC Topic 805, Business Combinations (“Topic 805”), total consideration was first allocated to the fair value of assets acquired, including liabilities assumed, with the excess being recorded as goodwill. For financial statement purposes, goodwill is not amortized but rather is evaluated for impairment at least annually or more frequently if an event or change in circumstances occurs that indicates goodwill may be impaired. Goodwill is deductible for tax purposes and will be amortized over a period of fifteen years.

The recorded purchase price for certain business combinations includes an estimation of the fair value of contingent consideration obligations associated with potential earnout provisions, which are generally based on earnings before income taxes, depreciation and amortization (“EBITDA”). The contingent earnout consideration amounts identified in the tables below are measured at fair value within Level 3 of the fair value hierarchy as discussed further in Note 13. Any subsequent changes in the fair value of contingent earnout liabilities will be recorded in the condensed consolidated statements of comprehensive income when incurred.

The recorded purchase price for certain business combinations also includes an estimation of the fair value of noncontrolling interests, which are calculated based on a valuation of the entity with the relevant percentage applied.

The Company completed the following four business combinations during the three months ended March 31, 2020:


•	Lanier, a Middle Market Partner effective January 1, 2020, was made to expand our Middle Market presence in the healthcare, higher education, construction, property and non-profit businesses throughout Florida and other states.


•	Highland, a Specialty Partner effective January 1, 2020, was made to expand our Specialty presence in the healthcare and cyber insurance businesses and to add capabilities within the real estate business.


•	AgencyRM, a Medicare Partner effective February 1, 2020, was made to expand our Medicare business presence in Texas.


•	VibrantUSA, a Medicare Partner effective February 1, 2020, was made to expand our Medicare business presence in Washington.

The operating results of these business combinations have been included in the condensed consolidated statements of comprehensive income since their respective acquisition dates. The Company recognized total revenues and net income from these business combinations of $7.7 million and $1.5 million, respectively, for the three months ended March 31, 2020.

Acquisition-related costs incurred in connection with these business combinations are recorded in operating expenses in the condensed consolidated statements of comprehensive income. The Company incurred acquisition-related costs from these business combinations of $456,000 for the three months ended March 31, 2020.

The table below provides a summary of the total consideration and the estimated purchase price allocations made for each of the business acquisitions that became effective during the three months ended March 31, 2020. Due to the complexity of valuing the consideration paid and the purchase price allocation and the timing of these activities, certain amounts included in the condensed consolidated financial statements may be provisional and subject to additional adjustments within the measurement period as permitted by Topic 805. Any measurement period adjustments related to prior period business combinations have been reflected as current period adjustments for the three months ended March 31, 2020 in accordance with Topic 805.



(in thousands)	Lanier			Highland			AgencyRM			VibrantUSA			Totals
Cash consideration paid	$	24,450		$	6,603		$	7,061		$	6,158		$	44,272
Fair value of contingent earnout consideration	1,628			788			679			142			3,237
Fair value of noncontrolling interest	6,119			4,500			1,558			—			12,177
Total consideration	$	32,197		$	11,891		$	9,298		$	6,300		$	59,686

Cash	$	2,413		$	1,542		$	573		$	439		$	4,967
Premiums, commissions and fees receivable	2,494			5,977			1,002			317			9,790
Property and equipment	294			—			—			—			294
Other assets	168			13			4			12			197
Intangible assets
Purchased customer accounts	6,308			—			—			—			6,308
Distributor relationships	—			6,500			4,300			3,800			14,600
Carrier relationships	—			659			—			—			659
Software	—			—			565			—			565
Trade names	—			214			25			32			271
Goodwill	23,739			4,228			3,369			1,725			33,061
Total assets acquired	35,416			19,133			9,838			6,325			70,712
Premiums and producer commissions payable	(2,954		)	(6,374		)	(540		)	(14		)	(9,882		)
Accrued expenses and other current liabilities	(265		)	(868		)	—			(11		)	(1,144		)
Total liabilities acquired	(3,219		)	(7,242		)	(540		)	(25		)	(11,026		)
Net assets acquired	$	32,197		$	11,891		$	9,298		$	6,300		$	59,686

Maximum potential contingent earnout consideration	$	11,000		$	2,450		$	3,000		$	378		$	16,828

The factors contributing to the recognition of the amount of goodwill are based on expanding business presence into new geographic locations and service markets, strategic benefits that are expected to be realized from acquiring the Partners’ assembled workforce in addition to other synergies gained from integrating the Partners’ operations into our consolidated structure.

The intangible assets acquired in connection with business combinations during the three months ended March 31, 2020 have the following estimated weighted-average lives:



	Weighted-Average Life
Purchased customer accounts	15.0 years
Distributor relationships	20.0 years
Carrier relationships	0.8 years
Software	2.0 years
Trade names	4.2 years

Future annual estimated amortization expense over the next five years for intangible assets acquired in connection with business combinations during the three months ended March 31, 2020 is as follows:



(in thousands)	Amount
For the remainder of 2020	$	3,883
2021	3,227
2022	2,486
2023	1,956
2024	1,433

The following unaudited pro forma consolidated results of operations are provided for illustrative purposes only and have been presented as if the acquisitions of Lanier, Highland, AgencyRM and VibrantUSA occurred on January 1, 2019. This unaudited pro forma information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisitions had occurred on that date, nor of the results that may be obtained in the future.



	For the Three Months Ended March 31,
(in thousands, except per share data)	2020		2019
Pro forma results:
Revenues	$	56,550	$	41,750
Net income	5,917		12,194
Net income attributable to BRP Group, Inc.	1,853

Basic earnings per share	$	0.09
Diluted earnings per share	$	0.09
Weighted-average shares of Class A common stock outstanding - basic	19,523
Weighted-average shares of Class A common stock outstanding - diluted	19,860