Acquisitions (Tables)

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of assets acquired and liabilities assumed

The following table summarizes the fair values of the assets acquired and liabilities assumed.

Cash and cash equivalents	$	13
Accounts receivable (1)	44
Inventory	36
Rental equipment	682
Property and equipment	42
Intangibles (2)	123
Operating lease right-of-use assets	59
Other assets	23
Total identifiable assets acquired	1,022
Current liabilities	(92)
Deferred taxes	(118)
Operating lease liabilities	(44)
Total liabilities assumed	(254)
Net identifiable assets acquired	768
Goodwill (3)	264
Net assets acquired	$	1,032

(1)The fair value of accounts receivables acquired was $44, and the gross contractual amount was $50. We estimated that $6 would be uncollectible.

(2)The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our purchase accounting assessments:

	Fair value		Life (years)
Customer relationships	$	116	7
Trade names and associated trademarks	7		5
Total	$	123

(3)All of the goodwill was assigned to our specialty segment. The level of goodwill that resulted from the acquisition is primarily reflective of General Finance's going-concern value, the value of General Finance's assembled workforce and new customer relationships expected to arise from the acquisition. $28 of goodwill is expected to be deductible for income tax purposes.

The following table summarizes the net book values of the assets acquired and liabilities assumed as of the acquisition date. The initial accounting for the acquisition is incomplete, principally related to finalizing 1) the measurement of the acquired net working capital, 2) the valuation of the acquired rental equipment (inclusive of the completion of our usual and customary procedures to validate the existence of the acquired rental fleet) and intangible assets, 3) the impact of lease

accounting and 4) the associated income tax considerations. All amounts below could change, potentially materially, as there is significant additional information that we must obtain to finalize the valuations of the assets acquired and liabilities assumed, and to establish the value of the potential intangible assets, primarily because of the proximity of the acquisition date to the balance sheet date of December 31, 2022.

Inventory	$	44
Rental equipment	1,352
Property and equipment	171
Other assets	8
Total identifiable assets acquired	1,575
Current liabilities	(33)
Total liabilities assumed	(33)
Net identifiable assets acquired	1,542
Goodwill (1)	470
Net assets acquired	$	2,012

(1)Goodwill was primarily assigned to our general rentals segment. As noted above, we have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, primarily because of the proximity of the acquisition date to the balance sheet date of December 31, 2022. As such, we expect that goodwill will change materially from the amount noted above. Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of Ahern Rentals' going-concern value, the value of Ahern Rentals' assembled workforce and new customer relationships expected to arise from the acquisition. All of the goodwill is expected to be deductible for income tax purposes (because this is a purchase of assets, the goodwill that is deductible for income tax purposes equals the total acquired goodwill. As noted above, we expect that goodwill will change materially from the amount above).

Finite-lived and indefinite-lived intangible assets acquired as part of business combination

The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our purchase accounting assessments:

	Fair value		Life (years)
Customer relationships	$	116	7
Trade names and associated trademarks	7		5
Total	$	123

Summary of pro forma information

	Year Ended
	December 31,
	2022		2021
United Rentals historic revenues	$	11,642	$	9,716
General Finance historic revenues	—		144
Ahern Rentals historic revenues	827		842
Pro forma revenues	$	12,469	$	10,702

	Year Ended
	December 31,
		2021
United Rentals historic pretax income		$	1,846
General Finance historic pretax income		9
Combined pretax income		1,855
Pro forma adjustments to combined pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)		(11)
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)		(6)
Intangible asset amortization (3)		(11)
Interest expense (4)		(6)
Elimination of historic interest (5)		23
Elimination of merger related costs (6)		12
Elimination of changes in the valuation of bifurcated derivatives in convertible notes (7)		(16)
Pro forma pretax income		$	1,840

________________

(1) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of the equipment acquired in the General Finance acquisition.

(2) Cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the General Finance acquisition.

(3) Intangible asset amortization was adjusted to include amortization of the acquired intangible assets.

(4) As discussed above, we funded the General Finance acquisition using drawings on our ABL facility. Interest expense was adjusted to reflect interest on the ABL facility borrowings.

(5) Historic interest on debt that is not part of the combined entity was eliminated. The adjustment includes a debt redemption loss of $12.

(6) Merger related costs primarily comprised of financial and legal advisory fees associated with the General Finance acquisition were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date. The adjustment includes $9 of merger related costs recognized by General Finance prior to the acquisition.

(7) General Finance historically recognized changes in the valuation of bifurcated derivatives in convertible notes in its statements of operations. These historic changes were eliminated because the bifurcated derivatives are not part of the combined entity.