Business Combinations and Asset Acquisitions

On November 17, 2017, the Company and Femiline AB and Johan Anderson, or the Seller, entered into an agreement to purchase certain assets from the Seller. The assets purchased included all existing inventory previously sold by the Company to the Seller, all customer relationships and a covenant not to compete. The aggregate purchase price for the assets purchased was 100,000 Class A Ordinary shares of the Company, contingently issuable upon achievement of specific milestones. Based on the valuation of the Company’s shares performed by a valuation specialist, the contingently issuable shares had an aggregate value of $1.0 million. The book value of the inventory at the time of the acquisition was approximately $0.7 million, which was revalued on the transaction date to be the estimated selling price less the cost to sell, which increased the fair value of the inventory to approximately $1.5 million.

Concurrently, the Company entered into a Separation Agreement with Novaform Ltd, or Novaform, and Pantelis Ioannou. In April 2015, Novaform had become a distributor for Establishment Labs S.A., wholly-owned subsidiary of the Company and subsequently sublicensed its distribution rights to Femiline AB. Under the Separation Agreement, Novaform agreed to relinquish the distribution rights back to the Company for $1.0 million in cash and 35,714 Class A ordinary shares. Based on the valuation of the Company’s shares performed by a valuation specialist, the fair value of the shares issued was $0.3 million.

This transaction enabled the Company to realign its existing distribution network in Sweden, Denmark and Norway and initiate direct sales to customers in the region.

The purchase price and allocation of purchase price were as follows:




Purchase Price:	(in thousands)
Cash consideration	$	1,000
Fair market value of Class A ordinary shares issued	344
Contingent consideration	964
Cash paid for inventory	704
Total purchase price	$	3,012




Allocation of Purchase Price:	(in thousands)
Inventory	$	1,498
Customer relationships	1,280
Covenant not to compete	24
Goodwill	210
Total purchase price allocated	$	3,012

As of December 31, 2018, the consideration of $0.4 million to Novaform has not been paid and is included in “Accounts payable”. As of March 31, 2019, the consideration of $0.4 million to Novaform was still outstanding.

The goodwill resulting from this acquisition is deductible for tax purposes.

Asset Acquisitions

Austria

On January 31, 2019, European Distribution Center Motiva BVBA, or EDC, entered into an asset purchase agreement with AFS Medical GMBH, or the Austria Seller, to purchase certain assets from the Austria Seller. The assets purchased included all existing inventory previously sold by the Company to the Austria Seller and all customer relationships and contracts. The aggregate purchase price for the assets purchased was the aggregate sum of book value of the inventory at the time of the transaction plus a cash payment of €293,000, or approximately $335,000, and 12,404 of the Company’s common shares.

The purchase price and allocation of purchase price were as follows:




Purchase Price:	(in thousands)
Cash consideration	$	335
Fair market value of common shares issued on effective date	337
Cash paid for inventory	432
Total purchase price	$	1,104




Allocation of Purchase Price:	(in thousands)
Inventory	$	1,104

As of March 31, 2019, the Company has fully paid for the Austria asset acquisition.

Germany

On October 3, 2018, EDC entered into an asset purchase agreement, effective November 26, 2018, with Menke Med GmbH, or the Germany Seller, to purchase certain assets from the Germany Seller. The assets purchased included all existing inventory previously sold by the Company to the Germany Seller and

all customer relationships and contracts. The aggregate purchase price for the assets purchased was the

aggregate sum of book value of the inventory at the time of the transaction plus a cash payment of up to a

maximum of €1.9 million, or approximately $2.2 million, to be paid out in installments upon the achievement of certain milestones as set forth in the agreement.

The purchase price and allocation of purchase price were as follows:




Purchase Price:	(in thousands)
Cash consideration	$	544
Minimum guaranteed milestone payments	1,161
Cash paid for inventory	917
Total purchase price	$	2,622




Allocation of Purchase Price:	(in thousands)
Inventory	$	2,137
Customer relationships	428
Covenant not to compete	57
Total purchase price allocated	$	2,622

Per the asset purchase agreement entered into with the German Seller, the German Seller is entitled to three milestone payments in the next three fiscal years following the year ended December 31, 2018. The German Seller will receive annual payments of €360,000 (approximately $404,000), €420,000 (approximately $471,000) or €480,000 (approximately $539,000) if the German Seller meets none, one, or both of the required milestones, respectively. Only the present value of the guaranteed minimum milestone payments of €360,000 per year for the next three years were included in the purchase price. Contingent consideration will be recognized when the contingency is deemed probable and reasonably estimable.

As of December 31, 2018, the Company has fully paid for the German asset acquisition excluding the milestone payments of $1.2 million. The Company determined that it is probable that the Germany seller will achieve both of the fiscal 2019 milestones and accrued an additional €120,000 (approximately $135,000) as of March 31, 2019.

Spain

On October 1, 2018, EDC entered into an asset purchase agreement effective October 29, 2018, with Motiva Matrix Spain SL, or the Spain Seller, to purchase certain assets from the Spain Seller. The assets purchased included all existing inventory previously sold by the Company to the Spain Seller and all customer relationships and contracts. The aggregate purchase price for the assets purchased was the aggregate sum of the book value of the inventory at the time of the transaction (subject to certain adjustments as set forth in the agreement) plus a cash payment of €1.6 million, or approximately $1.8 million, to be paid to the Spain Seller no later than December 1, 2018 following repayment by the Spain Seller to the Company of an outstanding balance in the amount of €2.0 million, or approximately $2.3 million.

The purchase price and allocation of purchase price were as follows:




Purchase Price:	(in thousands)
Cash consideration	$	1,838
Cash paid for inventory	1,774
Total purchase price	$	3,612




Allocation of Purchase Price:	(in thousands)
Inventory	$	3,560
Customer relationships	52
Total purchase price allocated	$	3,612

As of December 31, 2018, the Company had fully paid for the Spain asset acquisition.

The United Kingdom

On September 3, 2018, Motiva Implants UK Limited. entered into an asset purchase agreement, effective October 1, 2018, with Belle Health LTD, or the U.K. Seller, to purchase certain assets from the U.K. Seller. The assets purchased included all existing inventory previously sold by the Company to the U.K Seller and

all customer relationships and contracts. The aggregate purchase price for the assets purchased was the

aggregate sum of book value of the inventory at the time of the transaction, a future cash payment of $100,000 to be paid 18 months after the effective date and 5,000 of the Company’s common shares.

The purchase price and allocation of purchase price were as follows:




Purchase Price:	(in thousands)
Cash consideration	$	100
Fair market value of common shares issued on effective date	120
Cash paid for inventory	123
Total purchase price	$	343




Allocation of Purchase Price:	(in thousands)
Inventory	$	235
Customer relationships	108
Total purchase price allocated	$	343

As of December 31, 2018, the Company has fully paid for the U.K. asset acquisition excluding the future cash payment to be paid in April 2020.