Acquisition

9 Months Ended

Sep. 30, 2020

3. Acquisition

On August 26, 2019, the Company acquired the assets of Tuffy Manufacturing Industries, Inc. (“Tuffy”), a warehouse distributor of tire repair equipment and supplies, which is included in the Distribution Segment. The Tuffy acquisition aligns with the Company’s strategy to grow in key niche markets and focus on strategic account customers. The purchase price for the acquisition was $18.7 million, which includes a working capital adjustment of $0.7 million that was paid in 2020. The Company funded the acquisition using available cash.

The acquisition of Tuffy was accounted for using the acquisition method, whereby all of the assets acquired and liabilities assumed were recognized at their fair value on the acquisition date, with any excess of the purchase price over the estimated fair value recorded as goodwill. The following table summarizes the allocation of the purchase price based on the estimated fair value of assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.

Assets acquired:
Accounts receivable	$	2,105
Inventories		2,719
Prepaid expenses		43
Property, plant and equipment		124
Right of use asset - operating leases		229
Intangible assets		8,400
Goodwill		7,143
Assets acquired	$	20,763

Liabilities assumed:
Accounts payable	$	1,675
Accrued expenses		143
Operating lease liability - short term		112
Operating lease liability - long term		117
Total liabilities assumed		2,047

Net acquisition cost	$	18,716

The goodwill represents the future economic benefits arising from other assets acquired that could not be individually and separately recognized and is deductible for tax purposes.

The intangible assets included above consist of the following:

	Fair Value		Weighted Average Estimated Useful Life
Customer relationships	$	7,300	7.3 years
Trade name		500	5.0 years
Non-competition agreements		600	5.0 years
Total amortizable intangible assets	$	8,400