Note 16 - Acquisitions

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

16.  ACQUISITIONS

Effective January 2, 2020, the Company completed the acquisition of substantially all of the assets of MPI Products, Inc. (dba Marine Products International) (“MPI”), pursuant to the Asset Purchase Agreement entered into by and between Crawford United Acquisition Company LLC, an Ohio limited liability company and wholly-owned subsidiary of the Company, and MPI. Upon closing of the agreement, the assets were transferred to the Company in consideration of a purchase price of $9.4 million in cash, which was subject to post-closing adjustments based on working capital.

MPI manufactures and distributes industrial hoses used by the recreational boating industry and has one operating location in Cleveland, Ohio. Purchase price was assigned to the book value of the net assets acquired with the excess over the book value assigned to intangible assets and goodwill and has been allocated to the following accounts:

Cash Consideration Transferred	$	9,400,000
Accounts Receivable	$	771,088
Inventory		2,918,255
Fixed Assets		29,581
Prepaid and Other Assets		53,397
Intangible Asset: Trademark		1,590,000
Intangibles Asset: Customer List		2,730,000
Goodwill		1,714,108
Total Assets Acquired	$	9,806,429
Accrued Expense		406,429
Total Liabilities Assumed	$	406,429
Total Fair Value	$	9,400,000
Acquisition transaction costs incurred were:	$	110,548

Goodwill and Intangible Assets

Goodwill has an assigned value of $1.7 million and represents the expected synergies generated by combining the operations of MPI and the Company. The Company sells hoses to customers in the Industrial and Transportation Products segment and the acquisition of MPI allows the Company to expand into a new hose market segment. Intangible asset, trademark has an assigned value of $1.6 million which represents the expected value of the MPI trade name in the market. Intangible asset, customer list has an assigned value of $2.7 million which represents the expected value of the list of the customers of MPI to the Company.

 

Effective January 15, 2021, the Company completed the acquisition of all of the issued and outstanding membership interests of KT Acquisition LLC (dba Komtek Forge, “Komtek”), a Massachusetts limited liability company and supplier of highly engineered forgings for the aerospace, industrial gas turbine, medical prosthetics. alternative energy, petrochemical, and defense industries, pursuant to a Membership Interest Purchase Agreement entered into as of January 15, 2021. The Company acquired Komtek in consideration of the payment by the Company of an aggregate purchase price of $3.6 million, subject to certain post-closing adjustments based on working capital, indebtedness and selling expenses, as specified in the Membership Interest Purchase Agreement, which was comprised of cash, the issuance of 60,000 Class A common shares of the Company and the assumption of certain specified liabilities of the seller.

Cash Consideration Transferred	$	840,551
Assumed Debt		1,753,757
Fair Value of Stock Consideration		1,059,000
Total Consideration	$	3,653,308
Cash	$	75,701
Accounts Receivable		1,502,713
Inventory		1,595,859
Fixed Assets		434,197
Prepaid and Other Assets		280,258
Goodwill		832,306
Total Assets Acquired	$	4,721,034
Accounts Payable	$	843,817
Accrued Expense		223,909
Total Liabilities Assumed	$	1,067,726
Total Fair Value	$	3,653,308
Acquisition transaction costs incurred were:	$	147,400

Goodwill

Goodwill has an assigned value of $0.8 million and represents the expected synergies generated by combining the operations of Komtek and the Company. The Company purchases forgings to manufacture products for customers in the Industrial and Transportation Products segment and the Komtek acquisition strengthens the Company’s supply chain.

Effective March 1, 2021, MTA Acquisition Company, LLC, a Delaware limited liability company (“Global-Tek Colorado”) and indirect wholly-owned subsidiary of Crawford United Corporation, completed the acquisition of all of the membership interests of Global-Tek-Manufacturing LLC, a Puerto Rico limited liability company and specialist in machining parts from wrought, rounds, castings or extrusions and providing in house anodizing and other finishing and assembly operations and substantially all of the assets of Machining Technology L.L.C., a Colorado limited liability company with CNC machining capability, pursuant to a Membership Interest and Asset Purchase Agreement entered into March 2, 2021 and effective as of March 1, 2021. The stock and assets were transferred and assigned to MTA in exchange for approximately $4.9 million in cash and the repayment of remaining outstanding indebtedness and transaction costs totaling $1.5 million, subject to customary post-closing adjustments. The Purchase Agreement also includes a post-closing “earnout” that provides for up to an aggregate of $1.5 million in additional consideration to the certain sellers (up to $750,000 per year) if specified performance targets are met in the two years following closing. If earned, the additional consideration is payable in cash or, at the election of each such seller, in Company common shares up to a maximum aggregate amount of 61,475 shares.

Cash Consideration Transferred	$	4,913,530
Seller Transaction Costs and Repayment of Indebtedness		1,490,222
Total Consideration	$	6,403,752
Accounts Receivable	$	1,058,459
Inventory		173,202
Fixed Assets		3,233,073
Prepaid and Other Assets		1,036
Intangible Asset: Trademark		1,162,000
Intangibles Asset: Customer List		1,041,000
Goodwill		2,066,461
Total Assets Acquired	$	8,735,231
Accounts Payable	$	473,119
Accrued Payroll and Other Expense		214,879
Deferred Tax Liability		143,481
Contingent Liability		1,500,000
Total Liabilities Assumed	$	2,331,479
Total Fair Value	$	6,403,752
Acquisition transaction costs incurred were:	$	190,007

Goodwill and Intangible Assets

Goodwill has an assigned value of $2.1 million and represents the expected synergies generated by combining the operations of Global-Tek Colorado, Global-Tek-Manufacturing LLC and the Company. The Company utilizes machined parts for customers in the Industrial and Transportation Products segment and the acquisition of Global-Tek Colorado and Global-Tek-Manufacturing allows the Company to strengthen its supply chain. Intangible asset, trademark has an assigned value of $1.2 million which represents the expected value of the Global-Tek trade name in the market. Intangible asset, customer list has an assigned value of $1.0 million which represents the expected value of the list of the customers of Global-Tek to the Company.

Contingent Consideration

Global-Tek has a contingent consideration of $1.5 million as of the acquisition date which represents $750 thousand of additional consideration per year for a period of two years following the acquisition date if specified performance targets are met.  The additional consideration will be earned if Global-Tek achieves specified profitability targets and is payable either in cash or in common shares of the Company up to an aggregate maximum amount of 61,475 shares. The range of estimates for the outcome of the contingent consideration is between $0 and approximately $1.5 million. The maximum amount of the payment is the greater of the value of 61,475 common shares of the Company and $1.5 million.

Effective July 1, 2021, Crawford EH Acquisition Company, LLC, a Delaware limited liability company and indirect wholly-owned subsidiary of Crawford United Corporation, completed the acquisition of all of the operating assets of Emergency Hydraulics LLC, (“Emergency Hydraulics”) a Florida limited liability company and provider of hydraulic hoses, air tank assemblies and related products to manufacturers of firefighting trucks and other emergency vehicles, pursuant to an Asset Purchase Agreement entered into July 1, 2021. The acquired business is strategically important to the Company’s growing industrial hose platform and will expand its offerings and diversify its customer base in this important market segment. The assets were transferred and assigned to Emergency Hydraulics in exchange for approximately $0.3 million of repayment of remaining outstanding indebtedness and transaction costs.

Assumption of Indebtedness	$	287,359
Accounts Receivable	$	79,843
Inventory		67,254
Intangible Assets: Customer List		413,589
Total Assets Acquired	$	560,686
Accounts Payable	$	273,327
Total Liabilities Assumed	$	273,327
Total Fair Value	$	287,359
Acquisition transaction costs incurred were:	$	36,204

Intangible Assets

Intangible asset, customer list has an assigned value of $0.4 million which represents the expected value of the list of the customers of Emergency Hydraulics to the Company.

The following includes the revenue and net income of the acquired entities, as though each of the business combinations that occured during the current year had occured as of January 1, 2020.

	Twelve Months Ended December 31, 2021
	Acquired Entities		All Other Entites		Consolidated Pro Forma
Sales	$	41,776,303	$	65,156,011	$	106,932,314
Net Income	$	3,567,944	$	2,358,752	$	5,926,696

	Twelve Months Ended December 31, 2020
	Acquired Entities		All Other Entities		Consolidated Pro Forma
Sales	$	32,893,573	$	68,675,624	$	101,569,197
Net Income	$	1,927,056	$	4,739,740	$	6,666,796