Business Combinations

12 Months Ended

Sep. 02, 2023

Business Combination and Asset Acquisition [Abstract]

BUSINESS COMBINATIONS

Fiscal Year 2023 Acquisitions

In January 2023, the Company acquired certain assets and assumed certain liabilities of Buckeye Industrial Supply Co. (“Buckeye”), an Ohio-based metalworking distributor, and Tru-Edge Grinding, Inc. (“Tru-Edge”), an Ohio-based custom tool manufacturer, for aggregate consideration of $22,389, which includes cash paid of $20,500 and the fair value of contingent consideration to be paid out of $2,294, net of a post-closing working capital adjustment in the amount of $405 received from the sellers that was finalized during the third quarter of fiscal year 2023. Total cash consideration funded by the Company came from available cash resources.

Buckeye primarily serves the metalworking needs of large manufacturers. MSC plans to build on Buckeye’s technical, high-touch relationships and value-added services by offering customers access to its extensive product portfolio to support customers’ full metalworking and MRO needs. Tru-Edge brings new capabilities to MSC, including the design and manufacture of parts from scratch with a strong focus in the automotive and medical markets. The Company expects to drive revenue growth in its existing Midwest manufacturing customer base by leveraging the services provided by Tru-Edge. The Company believes the technical expertise and value-added services provided by Tru-Edge will support its effort to drive cost savings for its customers.

This acquisition was accounted for as a single business acquisition pursuant to ASC Topic 805. As required by ASC Topic 805, the Company allocated the consideration to assets and liabilities based on their fair value at the acquisition date. The following table summarizes the amounts of identified assets acquired and liabilities assumed based on the fair value at the acquisition date:


Inventories	$	1,019
Accounts receivable	2,745
Prepaid expenses and other current assets	27
Identifiable intangibles	10,600
Goodwill	7,826
Property, plant and equipment	1,291

Total assets acquired	$	23,508
Accounts payable	1,090
Accrued liabilities	29
Total liabilities assumed	$	1,119
Total purchase price consideration	$	22,389

Acquired identifiable intangible assets with a fair value of $10,600 consisted of customer relationships of $9,500 with useful lives of 10 years and trade names of $1,100 with useful lives of five years and 20 years for Buckeye and Tru-Edge, respectively. The goodwill amount of $7,826 represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The primary items that generated the goodwill were the premiums paid by the Company for the right to control the business acquired and the benefit from adding a highly complementary provider of metalworking tools and supplies, as well as design and manufacturing of parts. This goodwill will not be amortized and will be included in the Company’s periodic test for impairment at least annually. The goodwill is deductible for income tax purposes.

The amount of combined net sales and income before provision for income taxes from Buckeye and Tru-Edge included in the Consolidated Statement of Income for the fiscal year ended September 2, 2023 was $20,916 and $1,655, respectively. In addition, the Company incurred non-recurring transaction and integration costs relating to the acquisition totaling $341, which are included in Operating expenses in the Consolidated Statement of Income for the fiscal year ended September 2, 2023.

Fiscal Year 2022 Acquisitions

Acquisition of Certain Assets of Engman-Taylor

In June 2022, the Company acquired certain assets and assumed certain liabilities of Engman-Taylor Company, Inc. (“Engman-Taylor”), a Menomonee Falls, Wisconsin-based distributor of metalworking tools and supplies, for aggregate consideration of $24,838, which includes a post-closing working capital adjustment in the amount of $661 that was paid to the Company in August 2022. Total cash consideration funded by the Company came from available cash resources and borrowings under the Amended Revolving Credit Facility (see Note 10, “Debt”).

Acquisition of Tower Fasteners

In August 2022, the Company, through its subsidiary, All Integrated Solutions, Inc., acquired 100% of the outstanding shares of privately held Tower Fasteners, LLC (“Tower Fasteners”), a Holtsville, New York-based distributor of OEM fasteners and components, for aggregate consideration of $33,990, which includes a post-closing working capital adjustment in the amount of $1,152 paid by the Company, of which $1,029 was paid in August 2022 and $123 was paid in November 2022. Total cash consideration funded by the Company came from available cash resources and borrowings under the Amended Revolving Credit Facility (see Note 10, “Debt”).