On July 25, 2023, the Company acquired certain assets of Roker Inc. ("Roker"), a United States based provider of fully-integrated parking solutions that simplify permit, violation and enforcement management for organizations and municipalities, for approximately $3.1 million. The Company utilized borrowings under its Senior Credit Facility and cash on hand to fund the acquisition. Roker's operations are included in the Commercial segment.

The acquisition enhances the Company's position as a global provider of frictionless technology solutions that is independent of the Company's legacy parking management related operations. The acquisition of Roker has been accounted for as a business combination, and the assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. Goodwill was measured as the excess of the consideration over the assets acquired, including other intangible assets, less liabilities assumed. Tax deductible goodwill related to the acquisition was $0.9 million. The results of the acquisition's operations are reflected in the Condensed Consolidated Financial Statements from the date of the acquisition.

During the three and nine months ended September 30, 2023, the acquisition of Roker contributed $0.1 million of service revenue and $0.1 million of losses before income taxes, primarily due to the amortization related to the acquired other intangible assets.

The Company believes the information gathered to date provides a reasonable basis for estimating the fair values of the assets acquired and liabilities assumed, however, the provisional measurements of fair value for the other intangible assets and goodwill of Roker are subject to change. As a result, during the measurement period, which may be up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded with corresponding adjustments to goodwill. The Company expects to complete the purchase price allocations for the Roker acquisition as soon as practicable but no later than one year from the acquisition date.

The estimated fair values of the assets acquired and liabilities assumed based on the information that was available as of the acquisition date were as follows:


(millions)
Other intangible assets		2.3
Goodwill		0.9
Accounts payable		(0.1	)
Net cash paid	$	3.1

As discussed above, during the nine months ended September 30, 2023, the Company recorded additions to other intangible assets of $2.3 million. The other intangible assets acquired were recorded at their estimated fair value on the acquisition date as follows:


(millions)	Estimated Life	Estimated Fair Value
Proprietary know how	8.0 Years	$	2.1
Customer relationships	5.4 Years		0.2
Estimated fair value of identified intangible assets		$	2.3

The fair values of other intangible assets acquired were determined to be Level 3 under the fair value hierarchy. The fair value estimate for all identifiable intangible assets is based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset.

The estimated fair value of the Proprietary know how was determined using the multi-period excess earnings method under the income approach utilizing projected financial information for the technology that was acquired. The estimated fair value of the customer relationships was determined using the distributor method under the income approach.

On October 11, 2022, the Company acquired K M P Associates Limited ("KMP"), a United Kingdom based software and technology provider serving aviation and commercial parking clients, primarily through its Aeroparker technology, throughout the United States and Europe, for approximately $13.8 million, less cash acquired of $0.9 million, and assumed KMP's debt of $0.3 million. Immediately following the acquisition, the Company repaid all of the debt assumed. KMP's operations are included in the Aviation segment.

On November 10, 2022, the Company acquired certain assets of DIVRT, Inc. ("DIVRT"), a developer of innovative software and technology solutions that enables frictionless parking capabilities, for approximately $17.6 million. In addition, the Company may be required to pay the former owner of DIVRT a maximum amount of $7.0 million in contingent consideration if certain targets related to the number of the Company's locations using the DIVRT technology are met by October 31, 2025. Based on a probability weighting of potential payouts, the Company accrued $4.0 million in projected contingent consideration as of the acquisition date, which was determined to be Level 3 under the fair value hierarchy. The Company's estimate of the potential payout increased to $4.4 million as of September 30, 2023 compared to $4.1 million as of December 31, 2022. The increases were due to the changes in the present value of the estimated payout. The Company recorded $0.1 million and $0.3 million of operating expense within the Condensed Consolidated Statements of Income during the three and nine months ended September 30, 2023, respectively, related to the change in the present value of the contingent consideration. As of September 30, 2023, the Company determined that the first target will be met by October 31, 2023, which is the second milestone date. As a result, the Company will pay the former owner of DIVRT $1.4 million during the fourth quarter of 2023. The Company will continue to evaluate the potential payouts in the future and adjust the contingent consideration for any changes in the estimated fair value each reporting period. DIVRT's operations are included in the Commercial segment.

During the three and nine months ended September 30, 2023, the acquisitions contributed $1.5 million and $4.7 million, respectively, of services revenue and losses before income taxes of $0.9 million and $2.6 million, respectively, primarily due to the amortization related to the acquired other intangible assets.

The Company finalized its purchase price allocations for the KMP and DIVRT acquisitions during the nine months ended September 30, 2023. The fair value of the assets acquired and liabilities assumed were as follows:


(millions)
Cash and cash equivalents	$	0.9
Accounts receivable		0.7
Prepaid expenses and other current assets		0.1
Other intangible assets		21.7
Goodwill		16.3
ROU asset		0.1
Accounts payable		(0.1	)
Accrued and other current liabilities		(1.5	)
Deferred income tax liability		(2.5	)
Other long-term borrowings		(0.3	)
Net assets acquired and liabilities assumed		35.4
Less: cash and cash equivalents acquired		0.9
Less: contingent consideration payable		4.0
Net cash paid	$	30.5

In addition to the acquisitions discussed above, on April 18, 2022, the Company acquired certain other intangible assets for a purchase price of $1.8 million.

As discussed above, during the year ended December 31, 2022, the Company recorded additions to other intangible assets of $23.5 million. The other intangible assets acquired were recorded at their fair value on the acquisition dates as follows:


(millions)	Estimated Life	Fair Value
Proprietary know how	7.4 Years	$	17.3
Customer relationships	5.8 Years		3.2
Trade names	13.2 Years		1.8
Covenant not to compete	4.2 Years		1.2
Fair value of identified intangible assets		$	23.5

The fair values of other intangible assets acquired were determined to be Level 3 under the fair value hierarchy. The fair value for all identifiable intangible assets is based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset.

The fair values of the Proprietary know how were determined using the multi-period excess earnings method under the income approach utilizing projected financial information for each technology that was acquired. The fair value of the customer relationships was determined using the distributor method under the income approach. The fair values of the trade names were determined using the relief from royalty savings method under the income approach. The Company considered the return on assets and market comparable methods when estimating an appropriate royalty rate for the trade names.