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Note 6 - Business Acquisitions

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

NOTE 6.     BUSINESS ACQUISITIONS

2021 Acquisitions

During the year ended December 31, 2021, we completed three acquisitions of outdoor advertising businesses and related assets as well as the acquisition of a surety brokerage company. The outdoor advertising businesses were acquired for the purpose of expanding our presence in the outdoor advertising market in the Midwestern United States.  The membership units of the surety brokerage company were acquired for the purpose of expanding our presence in the surety and fidelity insurance business in the United States. These acquisitions were accounted for as business combinations under the provisions of ASC 805. A summary of the acquisitions is provided below.

Insurance Acquisition

American Contracting Services

On April 1, 2021, our subsidiary, GIG, acquired 100% of the stock of American Contracting Services, Inc., which we refer to as "ACS," a surety brokerage company located in Ohio, for a purchase price of $3,455,000. The total purchase price consists of $2,225,000 of cash, ten percent of which was held back by GIG and will be disbursed, subject to any claims for indemnification, over an 18-month period, and $1,230,000 in contingent consideration.  The fair value of the contingent consideration, classified in other long-term liabilities in the consolidated balance sheet, is dependent on the probability of ACS achieving certain financial performance targets. The contingent consideration ranges between zero and $1,275,000 and is payable twenty-four months following the closing date. Our purchase price allocation related to ACS includes property, plant and equipment, intangibles, and goodwill of $87,780, $970,000 and $2,605,844, respectively, as well as other net liabilities of $208,624.  The intangible assets include customer relationships and trade names and trademarks, each of which have a fifteen year useful life.

2021 Acquisitions

Outdoor Advertising Acquisitions

Thomas Outdoor

On January 26, 2021, our subsidiary, LMO, acquired from Thomas Outdoor Advertising, Inc., which we refer to as “Thomas,” 238 billboard structures and related assets located in Kansas for a purchase price of $6,102,508 paid in cash. Our purchase price allocation related to Thomas includes property, plant and equipment, intangibles, and goodwill of $1,706,708, $1,551,000 and $2,618,431, respectively, as well as other net assets of $226,369.  The intangible assets include customer relationships and permits which have useful lives of fifteen years and ten years, respectively.

Keleher

On November 19, 2021, Link Billboards Oklahoma, LLC, our wholly-owned subsidiary, which we refer to as "LBO", purchased the outdoor advertising assets of Keleher Outdoor Advertising, Inc. and Keleher Enterprises, Inc. (together "Keleher"), based in Bartlesville, OK for a purchase price of $12,220,000. Keleher was founded in 1975 and operates over 600 billboard faces in Oklahoma and southeast Kansas. Due to the timing of the transaction, the initial accounting for the business combination is incomplete.  We are still in the process of obtaining and assessing documentation of the contracts for customer relationships and detailed reports for structures and permits. The provisional purchase price allocation is based on internal information derived from our previous acquisitions in the Midwestern United States.

The following is a summary of the preliminary allocation of the purchase price, which includes the fair value allocation of the assets acquired and liabilities assumed:

		Keleher
Assets Acquired
Property, plant and equipment		$	3,276,245
Customer relationships			996,000
Permits			179,257
Goodwill			8,065,314
Right of use assets			1,634,263
Other			199,329
Total Assets Acquired			14,350,408
Liabilities Assumed
Lease liabilities			1,634,263
Other			496,145
Total Liabilities Assumed			2,130,408
Total		$	12,220,000

The intangible assets include customer relationships and permits which have useful lives of  fifteen years and  ten years, respectively.

2021 Acquisitions

Missouri Neon

On  December 30, 2021, LBO purchased the outdoor advertising assets of  Missouri Neon Outdoor, based in Springfield, MO. Missouri Neon Outdoor previously operated over 800 billboard faces in Missouri, Oklahoma and Arkansas. Due to the timing of the transaction, the initial accounting for the business combination is incomplete.  We are still in the process of obtaining and assessing documentation of the contracts for customer relationships and detailed reports for structures and permits. The provisional purchase price allocation is based on internal information derived from our previous acquisitions in the Midwestern United States.

The following is a summary of the preliminary allocation of the purchase price, which includes the fair value allocation of the assets acquired and liabilities assumed:

		Neon
Assets Acquired
Property, plant and equipment		$	8,419,759
Customer relationships			1,174,000
Permits			422,177
Goodwill			12,701,472
Right of use assets			4,093,478
Other			205,272
Total Assets Acquired			27,016,158
Liabilities Assumed
Lease liabilities			4,093,478
Other			777,332
Total Liabilities Assumed			4,870,810
Total		$	22,145,348

The intangible assets include customer relationships and permits which have useful lives of fifteen years and ten years, respectively.

Pro Forma Information

The following is the unaudited pro forma information assuming all business acquisitions occurred on January 1, 2021. For all of the business acquisitions depreciation and amortization have been included in the calculation of the pro forma information provided below, based upon the actual acquisition costs. Depreciation is computed on the straight-line method over the estimated remaining economic lives of the assets, ranging from two years to fifteen years. Amortization is computed on the straight-line method over the estimated useful lives of the assets ranging from two to fifty years. 

		For the Three Months Ended
		March 31,
		2022				2021
Revenue		$	16,292,947			$	15,398,218
Net Income Attributable to Common Stockholders		$	16,302,593			$	84,621,494
Basic Net Income per Share		$	0.55			$	3.10
Diluted Net Income per Share		$	0.55			$	3.10
Basic Weighted Average Class A and Class B Common Shares Outstanding			29,698,361				27,299,946
Diluted Weighted Average Class A and Class B Common Shares Outstanding			29,765,082				27,299,946

The information included in the pro forma amounts is derived from historical information obtained from the sellers of the businesses. 

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- Definition

The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-URI https://asc.fasb.org/subtopic&trid=2122178

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-URI https://asc.fasb.org/topic&trid=2303972

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