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Acquisition of Businesses | 12 Months Ended
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Dec. 31, 2024
Business Combinations [Abstract] |
Acquisition of Businesses | Acquisition of Businesses The acquisitions of our businesses are accounted for under the acquisition method of accounting. For each new platform acquisition, the Company typically structures the transaction so that a newly created holding company acquires 100% of the equity interests in the acquired business. The entirety of the purchase consideration is paid by the newly created holding company to the selling shareholders. The total purchase consideration is the amount paid to the selling shareholders and we will, from time to time, allow the selling shareholder to reinvest a portion of their proceeds alongside the Company at the same price per share, into the holding company that acquires the target business. Once the acquisition is complete, the selling shareholders no longer hold equity interests in the acquired company, but rather hold noncontrolling interest in the holding company that acquired the target business. Because the selling shareholders are investing in the transaction alongside the Company at the same price per share as the Company and are not retaining their existing equity in the acquired business, the Company includes the amount provided by noncontrolling shareholders in the total purchase consideration. A component of our acquisition financing strategy that we utilize in acquiring the businesses we own and manage is to provide both equity capital and debt capital, raised at the parent level, typically through our existing credit facility. The debt capital is in the form of “intercompany loans” made by the LLC to the newly created holding company and the acquired business and are due from the newly created holding company and the acquired business, and payable to the LLC by the newly created holding company and the acquired business. The selling shareholders of the acquired businesses are not a party to the intercompany loan agreements nor do they have any obligation to repay the intercompany loans. These intercompany loans eliminate in consolidation and are not reflected on the Company's consolidated balance sheets. Acquisition of The Honey Pot On January 31, 2024 (the "Closing Date"), the LLC, through its newly formed acquisition subsidiaries, THP Topco, Inc., a Delaware corporation (“THP Topco”) and THP Intermediate, Inc., a Delaware corporation (“THP Buyer”), acquired The Honey Pot Company Holdings, LLC (“THP”) and certain of its affiliated entities pursuant to a Merger and Stock Purchase Agreement (the “THP Purchase Agreement”) dated January 14, 2024 by and among THP Buyer, THP, VMG Honey Pot Blocker, Inc. (“Blocker I”), NVB1, Inc. (“Blocker II”), VMG Tax-Exempt IV, L.P., New Voices Fund, LP, THP Merger Sub, LLC (“THP Merger Sub”), VMG Honey Pot Holdings, LLC, as the Sellers’ Representative, and certain remaining equity holders of THP. Pursuant to the THP Purchase Agreement, subsequent to certain internal reorganizations, THP Buyer acquired all of the issued and outstanding equity of Blocker I and Blocker II and, thereafter, THP Merger Sub merged with and into THP (the “THP Merger”), with THP surviving such that the separate existence of THP Merger Sub ceased, with THP surviving the Merger as a wholly-owned, indirect subsidiary of the THP Topco. THP is the parent company of The Honey Pot Company (DE), LLC (“The Honey Pot Co.”). The Company acquired THP for a total purchase price, including proceeds from noncontrolling shareholders, of approximately $380 million (the “THP Purchase Price”), before working capital and certain other adjustments, at the Closing Date. The Company funded the THP Purchase Price with cash on hand. Certain equity holders of THP invested in the transaction along with the Company, representing 15% of the initial equity interest in THP Topco. The Company directly owns approximately 85% of THP Topco, which in turn indirectly owns all of the issued and outstanding equity interests of THP and The Honey Pot Co. Concurrent with the Closing Date, the Company provided a credit facility to THP Buyer, THP and The Honey Pot Co., as borrowers (the “THP Credit Agreement”), pursuant to which a secured revolving loan commitment and secured term loans were made available to Buyer, THP and The Honey Pot Co. (collectively, the “Borrowers”). The initial amount outstanding under these facilities on the Closing Date was approximately $110 million. The Honey Pot Co. is a feminine care brand that offers an extensive range of holistic wellness products across feminine hygiene, menstrual, consumer health, and sexual wellness categories. The Honey Pot Co.’s mission is to educate, support, and provide consumers around the world with the tools and resources that promote menstrual health and vaginal wellness. The results of operations of The Honey Pot Co. have been included in the consolidated results of operations since the date of acquisition. The Honey Pot Co.'s results of operations are reported as a separate operating segment as a branded consumer business. The table below provides the recording of the fair value of assets acquired and liabilities assumed as of the date of acquisition.
(in thousands) |  | Preliminary Purchase Price Allocation |  | Measurement Period Adjustments |  | Final Purchase Price Allocation
Purchase Consideration |  | $ | 380,121 |  |  | $ | (2,796) |  |  | $ | 377,325 |
Fair value of identifiable assets acquired: |  |  |  |  |  |
Cash |  | $ | 4,076 |  |  | $ | (3,320) |  |  | $ | 756 |
Accounts receivable (1) |  | 16,361 |  |  | — |  |  | 16,361 |
Inventory |  | 18,986 |  |  | — |  |  | 18,986 |
Property, plant and equipment |  | 1,888 |  |  | — |  |  | 1,888 |
Intangible assets |  | 247,000 |  |  | 24,300 |  |  | 271,300 |
Other current and noncurrent assets |  | 3,958 |  |  | — |  |  | 3,958 |
Total identifiable assets |  | 292,269 |  |  | 20,980 |  |  | 313,249 |
Fair value of liabilities assumed: |  |  |  |  |  |
Current liabilities |  | 10,957 |  |  | — |  |  | 10,957 |
Other liabilities |  | 1,480 |  |  | — |  |  | 1,480 |
Deferred tax liabilities |  | 27,846 |  |  | 2,680 |  |  | 30,526 |
Total liabilities |  | 40,283 |  |  | 2,680 |  |  | 42,963 |
Net identifiable assets acquired |  | 251,986 |  |  | 18,300 |  |  | 270,286 |
Goodwill |  | $ | 128,135 |  |  | $ | (21,096) |  |  | $ | 107,039 |
Acquisition consideration |  |  |  |  |  |
Purchase price |  | $ | 380,000 |  |  | $ | — |  |  | $ | 380,000 |
Cash acquired |  | 4,375 |  |  | (3,320) |  |  | 1,055 |
Net working capital adjustment |  | (3,126) |  |  | 524 |  |  | (2,602) |
Other adjustments |  | (1,128) |  |  | — |  |  | (1,128) |
Total purchase consideration |  | $ | 380,121 |  |  | $ | (2,796) |  |  | $ | 377,325 |
(1) The fair value of accounts receivable approximates book value acquired. The purchase allocation presented above is based upon management's estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the identifiable acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates and estimated discount rates. Current and noncurrent assets, property, plant and equipment and current and other liabilities are estimated at their historical carrying values, which approximates fair value. Inventory is recognized at fair value, with finished goods stated at selling price less an estimated cost to sell. Property, plant and equipment will be depreciated on a straight-line basis over the remaining useful lives of the assets. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well as expected future synergies. The goodwill of $107.0 million reflects the strategic fit of The Honey Pot Co. in the Company's branded consumer business and is not expected to be deductible for income tax purposes. In the second quarter of 2024, the purchase price allocation for The Honey Pot Co. was adjusted to reflect certain measurement period adjustments due to updated intangible asset valuation and an adjustment to deferred tax liabilities. Customer relationships was increased $24.3 million, with a corresponding decrease to goodwill. Deferred income tax liability increased $2.7 million, with a corresponding decrease to goodwill. In the third quarter of 2024, the purchase price of The Honey Pot Co. was adjusted to reflect the working capital settlement, additional purchase consideration of $0.5 million, and the related tax effect. The purchase price allocation for The Honey Pot Co. was finalized during the third quarter of 2024. The intangible assets recorded related to The Honey Pot Co. acquisition are as follows (in thousands):
Intangible Assets |  | Fair Value |  | Estimated Useful Lives
Tradename |  | 225,000 |  |  | 18 years
Customer relationships |  | 46,300 |  |  | 13 years
|  | $ | 271,300 |  |  |
The tradename was considered the primary intangible asset and was valued at $225.0 million using a multi-period excess earnings method. The customer relationships were valued at $46.3 million using a multi-period excess earnings method. The multi-period excess earnings method assumes an asset has value to the extent that it enables its owners to earn a return in excess of the other assets utilized in the business. Acquisition of PrimaLoft On July 12, 2022, the LLC, through its newly formed indirect acquisition subsidiary, Relentless Intermediate, Inc. ("PrimaLoft Buyer"), acquired PrimaLoft Technologies Holdings, Inc. (“PrimaLoft”) pursuant to a Stock Purchase Agreement (the “PrimaLoft Purchase Agreement”), dated June 4, 2022, by and between PrimaLoft Buyer and VP PrimaLoft Holdings, LLC ("PrimaLoft Seller"). The Company acquired PrimaLoft for a total purchase price, including proceeds from noncontrolling shareholders, of approximately $541.1 million, before working capital and other customary adjustments. The Company funded the acquisition through a draw on its 2022 Revolving Credit Facility and the proceeds from its new $400 million 2022 Term Loan Facility. PrimaLoft management invested in the transaction along with the Company, representing 9.2% of the initial equity interest in PrimaLoft. Concurrent with the closing, the Company provided a credit facility to PrimaLoft pursuant to which a secured revolving loan commitment and secured term loan were made available to PrimaLoft (the "PrimaLoft Credit Agreement"). The initial revolving loan and term loan commitments under these facilities on the closing date were $178 million. CGM received integration service fees of $4.8 million which were payable quarterly over the twelve-month period beginning September 30, 2022. The Company incurred $5.7 million of transaction costs in conjunction with the PrimaLoft acquisition, which was included in selling, general and administrative expense in the consolidated statements of operations during the third quarter of 2022. PrimaLoft, Inc. is a branded, advanced material technology company based in Latham, New York and is focused on the research and innovative development of high-performance material solutions, specializing in insulations and fabrics. The results of operations of PrimaLoft have been included in the consolidated results of operations since the date of acquisition. PrimaLoft's results of operations are reported as a separate operating segment as a branded consumer business. The table below provides the recording of the fair value of assets acquired and liabilities assumed as of the date of acquisition.
(in thousands) |  | Preliminary Purchase Price Allocation |  | Measurement Period Adjustments |  | Final Purchase Price Allocation
Purchase Consideration |  | $ | 539,576 |  |  | $ | 1,536 |  |  | $ | 541,112 |
Fair value of identifiable assets acquired: |  |  |  |  |  |
Cash |  | $ | 6,951 |  |  | $ | — |  |  | $ | 6,951 |
Accounts receivable (1) |  | 2,992 |  |  | — |  |  | 2,992 |
Inventory |  | 1,991 |  |  | — |  |  | 1,991 |
Property, plant and equipment |  | 1,058 |  |  | — |  |  | 1,058 |
Intangible assets |  | 248,200 |  |  | 58,700 |  |  | 306,900 |
Other current and noncurrent assets |  | 3,581 |  |  | (1,187) |  |  | 2,394 |
Total identifiable assets |  | 264,773 |  |  | 57,513 |  |  | 322,286 |
Fair value of liabilities assumed: |  |  |  |  |  |
Current liabilities |  | 8,865 |  |  | (1,080) |  |  | 7,785 |
Other liabilities |  | 360 |  |  | — |  |  | 360 |
Deferred tax liabilities |  | 51,268 |  |  | 12,108 |  |  | 63,376 |
Total liabilities |  | 60,493 |  |  | 11,028 |  |  | 71,521 |
Net identifiable assets acquired |  | 204,280 |  |  | 46,485 |  |  | 250,765 |
Goodwill |  | $ | 335,296 |  |  | $ | (44,949) |  |  | $ | 290,347 |
Acquisition consideration |  |  |  |  |  |
Purchase price |  | $ | 530,000 |  |  | $ | — |  |  | $ | 530,000 |
Cash acquired |  | 7,319 |  |  | (368) |  |  | 6,951 |
Net working capital adjustment |  | 2,257 |  |  | 1,904 |  |  | 4,161 |
Total purchase consideration |  | $ | 539,576 |  |  | $ | 1,536 |  |  | $ | 541,112 |
(1) The fair value of accounts receivable approximates book value acquired. The allocation of the purchase price presented above is based on management's estimate of the fair values using valuation techniques including the income, cost and market approach. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates and estimated discount rates. Current and noncurrent assets and current and other liabilities are valued at historical carrying values, which approximate fair value. Inventory is recognized at fair value, with finished goods stated at selling price less an estimated cost to sell. Property, plant and equipment is valued at fair value which approximates book value and will be depreciated on a straight-line basis over the remaining useful lives of the assets. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships, as well as expected future synergies. The goodwill of $290.3 million reflects the strategic fit of PrimaLoft in the Company's branded consumer business and is not expected to be deductible for income tax purposes. The PrimaLoft purchase price allocation was finalized in 2023. The intangible assets recorded related to the PrimaLoft acquisition are as follows (in thousands):
Intangible Assets |  | Fair Value |  | Estimated Useful Lives
Customer relationships |  | $ | 209,100 |  |  | 15 years
Tradename |  | 48,200 |  |  | 20 years
Technology |  | 49,100 |  |  | 11 years
In-process research and development (1) |  | 500 |  |  | N/a
|  | $ | 306,900 |  |  |
(1) In-process research and development is considered indefinite lived until the underlying technology becomes viable, at which point the intangible asset will be amortized over the expected useful life. The customer relationships were considered the primary intangible asset and was valued at $209.1 million using a multi-period excess earnings method. The technology was valued at $49.1 million using a mul ti-period excess earnings methodology with an assumed obsolescence factor. The tradename was valued at $48.2 million using a multi-period excess earnings method. The multi-period excess earnings method assumes an asset has value to the extent that it enables its owners to earn a return in excess of the other assets utilized in the business. Unaudited pro forma information The following unaudited pro forma data for the years ended December 31, 2024 and 2023 gives effect to the acquisition of The Honey Pot Co. as described above, and the dispositions of Ergo, Marucci and ACI, as if these transactions had been completed as of January 1, 2023. The pro forma data gives effect to historical operating results with adjustments to interest expense, amortization and depreciation expense, management fees and related tax effects. The information is provided for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the transaction had been consummated on the date indicated, nor is it necessarily indicative of future operating results of the consolidated companies, and should not be construed as representing results for any future period.
|  | Years ended
(in thousands, except per share data) |  | December 31, 2024 |  | December 31, 2023
Net sales |  | $ | 2,208,904 |  |  | $ | 2,072,328 |
Gross profit |  | $ | 1,006,694 |  |  | $ | 892,870 |
Operating income |  | $ | 230,440 |  |  | $ | 82,515 |
Net income (loss) from continuing operations |  | $ | 42,126 |  |  | $ | (48,403) |
Net income (loss) from continuing operations attributable to Holdings |  | $ | 4,479 |  |  | $ | (65,259) |
Basic and fully diluted net loss per share from continuing operations attributable to Holdings |  | $ | (1.26) |  |  | $ | (1.86) |
Other acquisitions Altor Solutions Lifoam - On October 1, 2024, Altor Solutions acquired 100% of the outstanding equity interests of Lifoam Industries LLC, a Delaware limited liability company (“Lifoam”) pursuant to a Purchase and Sale Agreement entered into on August 19, 2024 (the “Lifoam Acquisition”). Lifoam is a manufacturer and distributor of temperature-controlled shipping solutions. The purchase price was $137.8 million, excluding working capital and other adjustments to the purchase price. Altor incurred transaction costs of approximately $1.8 million, which are included in selling, general and administrative expense in the consolidated statement of operations. The acquisition and related transaction costs were funded through additional term loans of $143.7 million under the Altor intercompany credit agreement. The Company funded the additional intercompany loans used for the acquisition of Lifoam with a draw on the 2022 Revolving Credit Facility. Altor recorded a preliminary purchase price allocation of $19.9 million in goodwill, which is expected to be deductible for income tax purposes, $49.4 million in intangible assets comprised of $39.5 million in customer relationships and $9.9 million in tradenames, $24 million in capital asset step-up and $1.6 million in inventory step-up. The purchase price allocation is expected to be finalized in 2025. Velocity King's Camo - On July 8, 2022, Velocity acquired the assets of King's Camo LC, a manufacturer of outdoor performance apparel and gear, for a purchase price of approximately $25.2 million and included a potential earnout of $3.0 million. The final earnout amount was $1.3 million and was paid in the second quarter of 2023. The acquisition and related transaction costs were funded through an additional term loan of $25.7 million under the Velocity intercompany credit agreement. Velocity paid approximately $0.2 million in transaction fees. Velocity recorded a purchase price allocation, including goodwill of approximately $9.7 million, which is expected to be deductible for income tax purposes, and intangible assets of $7.1 million. The remainder of the purchase consideration was allocated to net assets acquired. The purchase price allocation was finalized in the fourth quarter of 2022.

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