Note 6 - Acquisitions

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

6.

     ACQUISITIONS

General

The Company has acquired numerous companies throughout its history and those acquisitions have generally included significant future contingent consideration. The Company gives no assurance that it will make acquisitions in the future and if they do make acquisitions gives no assurance that such acquisitions will be successful.

As of

December

31,

2016,

the Company had

four

active acquisition agreements whereby additional contingent consideration

may

be earned by the former shareholders:

1)

effective

July

1,

2012

the Company acquired certain assets of BGA, LLC (“BGA”);

2)

effective

August

1,

2014

the Company acquired all of the stock of Point Comm, Inc. (“PCI”);

3)

effective

July

5,

2015,

the Company acquired certain assets of Substation Design Services, LLC (“SDS”); and

4)

effective

December

31,

2016,

the Company acquired certain assets of Allied Health Professionals, LLC (“AHP”). The Company estimates future contingent payments at

December

31,

2016

as follows:

Fiscal Year	Total
December 30, 2017	$	1,061
December 30, 2018		170
Estimated future contingent consideration payments	$	1,231

Estimates of future contingent payments are subject to significant judgment and actual payments

may

materially differ from estimates. Future contingent payments to be made to BGA, PCI, SDS and AHP are capped at cumulative maximums of

$0.7

million,

$1.1

million,

$1.5

million and

$0.1

million, respectively. The Company estimates future contingent consideration in payments based on forecasted performance and recorded at the net present value of those expected payments as of

December

31,

2016.

The measurement is based on significant inputs that are not observable in the market, which “Fair Value Measurements and Disclosures” (ASU Topic

820

-

10

-

35)

refers to as Level

3

inputs.

AHP

Effective

December

31,

2016,

the Company acquired the business operations of Allied Health Professionals, LLC (“AHP”). AHP was a Chicago area healthcare staffing company providing physical therapists, occupational therapists and speech language pathologists to hospitals, rehabilitation centers, schools and outpatient programs. The Company expects the AHP acquisition to complement its Chicago area operations which formerly provided primarily nurses to the Chicago Public School system. AHP will add new clients and expand the Company’s service offerings in the Chicago area.

The purchase price for AHP was

$695,

all of which was allocated to goodwill, payable as follows:

1)

cash of

$275

paid in

January

2017;

2)

an unsecured note payable of

$280

amortizable in quarterly installments through

October

2018;

and

3)

maximum contingent consideration of

$140

tied to certain gross profit targets and, if earned, payable in

2018.

SDS

Effective

July

5,

2015,

the Company acquired the business operations of Substation Design Services, LLC (“SDS”). SDS was a Pennsylvania based engineering company specializing in the in design services for substation projects.  SDS has experience with substation design, including electrical design, system protection and control design, and civil structural design. The Company expects the purchase of SDS to complement and expand RCM’s engineering services offerings and provide RCM’s customers with a stronger depth of experienced engineering resources. The Company believes that the SDS assembled workforce consists of highly trained and experienced engineers that will greatly assist RCM in executing future growth in revenues.  The SDS acquisition operates as part of the Company’s Engineering segment.