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Note 12 - Acquisition of Sims Transport Services, LLC | 9 Months Ended
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Sep. 30, 2023
Sims Transport Services, LLC [Member] |
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
Note 12. | Acquisition of Sims Transport Services, LLC
On August 18, 2023, we acquired 100% of the equity interests of Sims, a specialized brokerage company, headquartered in Maysville, GA. The acquisition date fair value of the consideration transferred was $9.8 million. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Stock Purchase Agreement includes an earnout component of up to an aggregate of $12.0 million based on Sims' adjusted earnings before interest, taxes, depreciation, and amortization reported for the first through fourth calendar years following closing. The total purchase price, including any earnout achieved, is expected to range from $9.8 million to $20.0 million depending on the results achieved by Sims. Sims' results have been included in the consolidated financial statements since the date of acquisition and are reported within our Managed Freight reportable segment. The preliminary acquisition date fair value of the consideration transferred consisted of the following:
|  | August 18, 2023 |
(in thousands) |  |  |  |
Cash paid pursuant to Stock Purchase Agreement |  | $ | 8,561 |
Cash acquired included in historical book value of Sims' assets and liabilities |  |  | (526 | )
Contingent consideration |  |  | 1,786 |
Net purchase price |  | $ | 9,821 |
The contingent consideration arrangement requires us to pay up to $12.0 million of additional consideration to Sim's former equity-holders based on Sims' results during the first four calendar years following closing. We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. Refer to Note 3, "Fair Value of Financial Instruments" for information regarding changes in the contingent consideration arrangement. A deferred tax liability of $1.6 million was recorded arising from the intangible assets related to the acquisition. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date.
|  | August 18, 2023 |
Accounts receivable |  | $ | 735 |
Other intangibles, net |  |  | 6,090 |
Total identifiable assets acquired |  |  | 6,825 |
Accounts payable |  |  | (457 | )
Accrued expenses |  |  | (4 | )
Deferred tax liability |  |  | (1,614 | )
Total liabilities assumed |  |  | (2,075 | )
Net identifiable assets acquired |  |  | 4,750 |
Goodwill |  |  | 5,071 |
Net assets acquired |  | $ | 9,821 |
The goodwill recognized is attributable primarily to expected cost synergies as a result of overhead support. Refer to Note 15, "Goodwill and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired.

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