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Note 5 - Acquisitions and Divestitures
 12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Mergers, Acquisitions and Dispositions Disclosures [Text Block]
 

5.

Acquisitions and Divestitures

 

Gaomei

 

On January 4, 2019, we completed the acquisition of Hefei Gaomei Cleaning Machines Co., Ltd. and Anhui Rongen Environmental Protection Technology Co., Ltd. (collectively "Gaomei"), privately held designers and manufacturers of commercial cleaning solutions based in China. The financial results for Gaomei have been included in the consolidated financial results since the date of closing.

 

The fair value measurements were final as of December 31, 2019.

 

The total purchase price includes the following:

 

 

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$11.3 million which was paid during the first quarter of 2019 upon close of the transaction;

 

 

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$11.3 million which was paid in the fourth quarter of 2019;

 

 

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$4.7 million which represents the estimated fair value of contingent consideration at the acquisition date. The estimate is based on a probability-weighted scenario analysis of achieving certain levels of gross profit growth over a three year period. In April 2020, the earnout agreement was modified.  The final payment is based on a fixed payment plus variable payments contingent on achieving certain levels of gross profit and milestones during 2020. Based on the financial results of 2020 and the milestones achieved, consideration of $1.8 million will be paid in March 2021; and

 

 

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$(0.2) million which represents a working capital purchase price adjustment.

 

None of the goodwill is expected to be deductible for income tax purposes. The expected lives of the acquired amortizable intangible assets range from 10 years to 15 years and are being amortized on a straight-line basis. The pro forma effects of this acquisition are not significant to the Company.

 

Waterstar

 

During 2018, we sold substantially all of the assets of our Waterstar business for $4.0 million in cash. The resulting gain was approximately $1.0 million and is reflected within Selling and Administrative Expense in operating profit in our Consolidated Statements of Operations.