ACQUISITIONS

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Freedom Transaction

On November 8, 2021, RumbleOn entered into a Membership Interest Purchase Agreement to acquire 100% of the equity interests of the Freedom Entities, and completed the acquisition on the Freedom Closing Date (the “Freedom Transaction”). The Freedom Entities own and operate powersports retail dealerships, including associated real estate, involving sales, financing, and parts and service of new and used motorcycles, ATVs, UTVs, scooters, side-by-sides, sport bikes, cruisers, watercraft, and other powersports vehicles.

We accounted for the Freedom Transaction as a business combination under ASC 805, Business Combinations. Under the terms of the Membership Interest Purchase Agreement, all outstanding equity interests of the Freedom Entities were acquired for total consideration of $97,237, consisting of $70,569 paid in cash, including certain transaction expenses paid on behalf of the Freedom Entities' equity holders, and issuance of 1,048,718 shares of Class B Common Stock with a value of $26,511 on the Freedom Closing Date. On June 22, 2022, 2,446 shares of Class B Common Stock held in escrow were cancelled as part of the final purchase price adjustment.

The following table summarizes the final components of consideration transferred by the Company for the Freedom Transaction:


Cash	$	70,569
Class B Common Stock	26,511
Acquiree transaction expenses paid by the Company at closing	157
Total purchase price consideration	$	97,237

Freedom Transaction Estimated Fair Value of Assets and Liabilities Assumed

On February 18, 2022, the Company completed its acquisition of the Freedom Entities. The Company finalized its accounting for consideration transferred, assets acquired, and liabilities assumed during the quarter ended March 31, 2023. All adjustments were recorded within the measurement period that ended on February 17, 2023. Total goodwill acquired as part of the Freedom Entities acquisition was $29,359.

All of Freedom Entities' acquired assets and liabilities, including goodwill recognized as a result of the Freedom Transaction, have been included in the Company’s Powersports reporting segment, as the Freedom Entities business is entirely within the Company’s Powersports segment.

The Company finalized its valuation of assets acquired, including intangible assets, and has recorded appropriate adjustments to the purchase price allocation during the measurement period. The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenue and expenses, and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

The Company uses the income approach to determine the fair value of certain identifiable intangible assets including franchise rights. This approach determines fair value by estimating after-tax cash flows attributable to these assets over their respective useful lives and then discounting these after-tax cash flows back to a present value. The Company bases its assumptions on estimates of future cash flows, expected growth rates, retention factors, etc. Discount rates used to arrive at a present value as of the date of acquisition are based on the time value of money and certain industry-specific risk factors. The Company believes the estimated purchased franchise rights and non-compete agreements amounts so determined represent the fair value at the date of acquisition, and do not exceed the amount a third-party would pay for such assets.

Pro Forma Information for Acquisitions

The Company has included the operating results of the Freedom Entities in its consolidated statements of operations since February 18, 2022. The following unaudited pro forma financial information presents consolidated information of the Company as if the Freedom Transaction was completed at December 31, 2021.


	Six Months Ended June 30,
	2023		2022
	(unaudited)
Pro forma revenue from continuing operations	$	717,115	$	770,396
Pro forma net income (loss) from continuing operations	$	(29,539)	$	23,387
Earnings (loss) per share from continuing operations - basic	$	(1.81)	$	1.48
Weighted average number of shares - basic	16,343,758		15,778,461
Earnings (loss) per share from continuing operations - fully diluted	$	(1.81)	$	1.48
Weighted average number of shares - fully diluted	16,343,758		15,841,346

Red Hills Powersports Acquisition

On March 3, 2023, the Company acquired Red Hills powersports, a single retail location representing 10 original equipment manufacturers ("OEMs") in Tallahassee, Florida, for total consideration approximating $3,300 in cash.