As discussed in Note 1, on November 20, 2019, Accel Entertainment, Inc., consummated a business combination pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Pursuant to the Transaction Agreement, TPG Holdings Corp. acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel Entertainment, Inc. In connection with reverse recapitalization, TPG Pace Holdings Corp. changed its name to Accel Entertainment, Inc.

The consideration paid to holders of Accel stock in connection with the reverse recapitalization and subject to the terms and conditions of the Transaction Agreement, consisted of a mix of consideration comprised of cash consideration equal to the number of shares of Accel stock for which such holder of Accel stock made a cash election multiplied by $177 per share (the “Purchase Price”) and share consideration comprised of a number of Class A-1 common stock equal to the number of shares of Accel Stock for which such holder of Accel Stock did not make a cash election multiplied by an exchange ratio calculated by dividing the Purchase Price by $10.30, which was the closing price of the common stock of TPG Pace Holdings Corp. on November 20, 2019. In addition, each holder of Accel stock that made a cash election with respect to less than 70% of its shares of Accel stock received its pro rata share, with such pro rata share determined with reference to a number of shares equal to 70% of such holder’s shares of Accel Stock less the number of shares of Accel stock with respect to which such holder made a cash election, of 2,444,444 Private Placement Warrants (as defined in Note 12), subject to the conditions set forth in a warrant agreement and 3,000,000 Class A-2 common stock, subject to the conditions set forth in a restricted stock agreement.

In connection with the reverse recapitalization, TPG Pace Holdings and its affiliates converted 7,500,000 of Class A-1 common stock, 4,888,889 Private Placement Warrants subject to the conditions set forth in the New Pace Warrant Agreement and 2,000,000 Class A-2 common stock, subject to the conditions set forth in a restricted stock agreement.

As part of an Investment Private Placement, certain accredited investors (as defined by Rule 501 of Regulation D) agreed to subscribe for and purchase and TPG Pace Holdings Corp. agreed to issue and sell to such investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million. The proceeds from the Investment Private Placement was used to fund a portion of the cash consideration required in the reverse recapitalization.

In connection with the reverse recapitalization, Accel repurchased approximately 36,157 shares of its stock from certain employees, directors and officers at a repurchase price of $177 per share in order to facilitate (i) the repayment of existing loans to Accel’s executive officers, (ii) the exercise of vested options and (iii) funding any resulting tax obligations from the exercise of such vested options.


	Amount
TPG Holdings Corp cash balance, November 19, 2019	$	429,952
Less redemption of Accel shares prior to reverse recapitalization	(413,733)
Cash balance prior to backstop equity financing	16,219
Plus funds from Investment Private Placement	48,038
Cash balance prior to consummation of the reverse recapitalization	64,257
Less adjustments to equity infusion:
Payment for sponsor loan	(4,000)
Less impact from issuance of contingent earnout shares	(51,641)
Less impact from issuance of warrants	(45,993)
Transaction costs related to the reverse recapitalization, net of tax	(31,006)
Net equity deficit prior to stock issuance	(68,383)
Impact of stock issued in reverse recapitalization	10
Net equity deficit from reverse recapitalization	(68,373)
Less impact from conversion of treasury stock and issuance of warrants	(7,414)
Net impact to additional paid-in-capital from reverse recapitalization	$	(75,787)


Accel Capital Stock - pre reverse recapitalization						Number of Shares
Class A Common Stock						472,773
Class B Common Stock						662,228
Class C Preferred Stock						1,530,779
Class D Preferred Stock						944,925

Total Shares of Accel Stock on November 20, 2019						3,610,705
Exchange ratio						17.188531
Effect of exchange ratio to convert Accel stock to A-1 Common Stock						62,062,715
Shares issued in reverse recapitalization						14,574,755
Total A-1 Common Stock						76,637,470

Immediately after the reverse recapitalization, there were 76,637,470 Class A-1 common stock, 4,999,999 Class A-2 common stock, and 22,333,308 Warrants to purchase Class A-1 Common Stock issued and outstanding. Upon the closing, the Company's Class A-1 Common Stock and public warrants began trading on the New York Stock Exchange.

On March 2, 2021, the Company announced that it had entered into a securities purchase agreement, to acquire Century Gaming, Inc. (“Century”). Century is Montana’s largest gaming operator and a leader in the Nevada gaming market with over 900 licensed establishments and more than 8,500 gaming terminals across both states. Pursuant to the purchase agreement, the Company will acquire all of the outstanding equity interests of Century in a cash and stock transaction valued at $140 million. The transaction was approved by the board of directors of each of the Company and Century, and is expected to close in the first half of 2022, subject to the satisfaction of customary closing conditions, including regulatory approvals from applicable gaming authorities. The transaction is expected to be funded through a combination of the Company’s cash on hand and capacity under its existing credit facility, in addition to the issuance of approximately 450,000 shares of common stock.

On May 20, 2021, the Company acquired Island Games, Inc. (“Island”), a southern Georgia amusement operator and Master Licensee in the state of Georgia. The acquisition of Island adds 30 Georgia Coin Operated Amusement Machine (“COAM”) Class B locations to the Accel portfolio, including a total of 89 Class B COAM terminals. The total purchase price was approximately $2.9 million, of which the Company paid $2.8 million in cash at closing. The remaining $0.1 million of contingent consideration is to be paid in cash if certain operating metrics are achieved. The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with Topic 805. The purchase price was allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The results of operations for Island is not material to the consolidated financial statements of the Company for the year ended December 31, 2021.

On December 30, 2021, the Company entered into an agreement to acquire all of Rich and Junnie's operating assets in Iowa and Illinois. Rich and Junnie's operations in Iowa and Illinois consists of the ownership and operation of amusement devices and ATMs in certain establishments. Total consideration was $4.2 million of which $3.6 million which was paid in cash at closing and $0.6 million was recorded in short-term consideration payable on the consolidated balance sheets. The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with Topic 805. The purchase price was allocated to the following assets: i) video game terminals and equipment totaling $0.3 million; ii) amusement and other equipment totaling $1.3 million; iii) location contracts totaling $1.6 million; iv) cash totaling $0.6 million; and v) goodwill of $0.4 million. The results of operations for Rich and Junnie's are not material to the consolidated financial statements of the Company as the acquisition date (December 30, 2021) was one day prior to year end.

On July 22, 2020 (the “Tom's Closing Date”), the Company acquired Tom’s Amusement Company, Inc., (“Tom's Amusements”) a southeastern U.S. gaming and amusement operator and Master Licensee in the state of Georgia. The total purchase price was $3.6 million, of which the Company paid $2.1 million in cash at closing. The remaining $1.5 million of contingent consideration payables are to be paid in cash on the 18-month and 24-month anniversaries of the Tom's Closing Date. The amount of each payment is $750,000 multiplied by a performance ratio. The fair value of the contingent consideration was $1.4 million as of December 31, 2021 and is included within consideration payable on the consolidated balance sheets. In addition, the Georgia Lottery Corporation approved Accel's operating subsidiary, Bulldog Gaming, LLC, as a Master Licensee, which allows the Company to install and operate coin operated amusement machines for commercial use by the public for play throughout the State of Georgia.

The acquisition aggregate purchase consideration transferred totaled $32.0 million, which included i.) cash paid at closing of $30.5 million and ii.) contingent purchase consideration with an estimated fair value of $1.5 million. The contingent consideration represents potentially two installment payments i.) $0.9 million if the acquired locations meet certain base performance criteria and ii.) an additional $1.4 million if the acquired locations meet additional performance criteria. The estimated fair value of the contingent consideration was determined based on the Company’s expected probability of future payment, discounted using AVG’s weighted average cost of capital. The Company paid $2.3 million of the contingent consideration during the year ended December 31, 2021. The fair value of the remaining contingent consideration payments is included within consideration payable on the consolidated balance sheets.



Cash paid	$	30,522
Fair value of contingent consideration	1,506
Total consideration	$	32,028
Cash	$	504
Location contracts acquired	17,500
Property and equipment:
Video game terminals and equipment	2,479
Amusement and other equipment	207
Vehicles	43
Other assets, net	63
Goodwill	11,243
Total assets acquired	32,039
Accrued expenses assumed	(11)
Net assets acquired	$	32,028

On August 6, 2020, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Operators, Inc. terminal use agreements and equipment representing the operations of 13 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration of $4.0 million consisted of: i) cash payment of $3.7 million paid at closing and; ii) deferred payment of $0.3 million which was paid 90-days from the closing date. The asset acquisition costs were allocated to the following assets: i) video game terminals and equipment totaling $0.6 million and; ii) location contracts totaling $3.4 million.

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River Jackpot. Grand River Jackpot had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents two installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River Jackpot’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded with the Company’s existing credit facilities. In connection with the temporary suspension of gaming by the IGB due to the COVID-19 pandemic in 2020, the Company reversed its contingent liability for the previously mentioned $2.5 million installment payment due 30 days following the one-year anniversary of the acquisition closing date as the performance measures for the period were not reached.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with Topic 805. The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Grand River Jackpot acquisition resulted in recorded goodwill as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes. Management integrated the Grand River Jackpot acquisition into its existing business structure, which is comprised of a single reporting unit.



Cash paid	$	106,578
Contingent consideration	7,136
Total consideration	$	113,714
Cash	$	8,861
Location contracts acquired	53,200
Property and equipment:
Video game terminals and equipment	18,000
Land	28
Buildings	548
Vehicles	600
Goodwill	34,511
Total assets acquired	115,748
Accounts payable assumed	(532)
Accrued expenses assumed	(1,502)
Net assets acquired	$	113,714

The results of operations for Grand River Jackpot are included in the consolidated financial statements of the Company from the date of acquisition. Grand River Jackpot's acquired assets generated revenues and net income of $16.6 million and $1.2 million for the year ended December 31, 2019.

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing. The asset acquisition costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bore interest at 5% and was paid in full on March 23, 2020.

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the years ended December 31, 2021, 2020 and 2019 as if the acquisitions of Rich and Junnie's, Island, AVG, Tom's Amusements, and Grand River Jackpot, had occurred as of the beginning of the fiscal year prior to the fiscal year of acquisition, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquirees prior to the acquisition dates and are not necessarily indicative of what the Company’s operating results would have been had the acquisitions actually taken place at the beginning of the fiscal year prior to the fiscal year of acquisition. This unaudited pro forma information for the years ended December 31, does not project revenues and income before income tax expense post acquisition (in thousands).

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the consolidated balance sheets as of December 31, 2021 and 2020. The contingent consideration accrued is measured at fair value on a recurring basis.


	2021				2020
	Current		Long-Term		Current		Long-Term
TAV*	$	490	$	2,858	$	490	$	3,206

Fair Share Gaming*	1,875		508		1,096		523
Family Amusement*	677		1,944		391		2,609
Skyhigh*	801		7,396		601		5,789
G3*	414		—		355		100
Grand River Jackpot	6,479		—		—		5,755
IGS	—		—		80		—
Island	100		—		—		—
Tom's Amusements	1,491		—		—		1,455
Rich and Junnie's	646		—		—		—
AVG	371		—		—		1,506
Total	$	13,344	$	12,706	$	3,013	$	20,943