v3.25.2
Acquisition
 6 Months Ended
Jun. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisition Acquisition
Payslate
On January 21, 2025, PRTH’s wholly owned subsidiary, Priority Canada Acquisition Company, Inc. (the "acquiring entity"), acquired 100% of the equity interest in Payslate Inc. (Canada), and its subsidiary Rentmoola Payment Solutions Ltd (United Kingdom) (jointly referred as "Letus business"). The Letus business is engaged in processing of rent payments for property management companies in the United States and Canada. The acquisition will provide synergy opportunities to the Company's Enterprise Payments rent payment business and expand Priority's services in Canada. The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. The total purchase consideration was $9.0 million, consisting of $4.6 million in cash consideration funded by the Company’s cash flows, deferred consideration of $4.3 million and contingent consideration of $0.1 million.
The deferred consideration of $4.3 million was recorded at the fair value on the acquisition date. The deferred consideration will be paid monthly equal to 40% of gross profit under the agreement. Any amount remaining but unpaid will be paid in full by January 21, 2030. The Company will accrete interest expense on the deferred consideration throughout the period, which was $0.2 million for three and six months ended June 30, 2025. As of June 30, 2025, total deferred consideration was $4.5 million, $0.6 million included in accounts payable and accrued expenses and $3.9 million included in noncurrent liabilities on the Unaudited Consolidated Balance Sheets.
Results for the Letus business since the acquisition are included within the Enterprise Payments segment, which includes $0.1 million and $0.4 million in revenue and a net loss of $0.2 million and $0.2 million for the three and six months ended June 30, 2025, respectively.
The preliminary purchase price allocation is set forth in the table below:
(in thousands)
Consideration:
Cash(1)
$4,627 
Deferred consideration (2)
4,282 
Contingent consideration(3)
104 
Less: cash acquired(175)
Total purchase consideration, net of cash acquired$8,838 
Recognized amounts of assets acquired and liabilities assumed(4):
Accounts receivable$149 
Prepaid expenses229 
Property, equipment and software8 
Goodwill6,070 
Intangible assets:
Customer relationships1,555 
Trademarks480 
Technology706 
Accounts payable and accrued expenses(359)
Total purchase consideration$8,838 
(1)Cash at closing net of adjustments from estimated net working capital to actual working capital.
(2)The fair value of the deferred consideration was determined utilizing a Monte Carlo simulation. The payments were calculated based on the path for the simulated metrics and the contractual terms of the deferred consideration payments and were discounted to present value at a rate reflecting a risk associated with the payoffs. The fair value was estimated to be the average present value of the deferred consideration payments over all iterations of the simulation.
(3)The contingent consideration represents the fair value of the share of net operating loss carryforwards owed to the seller in the future.
(4)Includes deferred tax asset of $3.8 million which has a full valuation allowance.
The Company incurred $0.5 million in acquisition related costs, which primarily consisted of consulting, legal and accounting and valuation expenses. These expenses were recorded in selling, general and administrative expenses in the Company's Consolidated Statements of Operations and Comprehensive Loss. Based on the purchase consideration and pre-acquisition operating results, this business combination did not meet the materiality requirements for pro forma disclosures.