v3.26.1
Acquisitions
 12 Months Ended
Jun. 30, 2025
Business Combination [Abstract]  
Acquisitions
3.
Acquisitions
Acquisition of MGM
On the MGM Acquisition Date, the Company and its affiliates acquired 100% of the outstanding equity and assets of MGM in exchange for cash, equity in Forgent Parent I and a payable to the MGM Sellers. The acquisition resulted in an ownership change in MGM and is being accounted for as a business combination using the acquisition method of accounting. The aggregate purchase price was $424.7 million, consisting of $365.6 million in cash, $46.1 million in equity of Forgent Parent I and a $13.0 million payable to the MGM Sellers. The cash portion of the purchase price was funded by a capital contribution and proceeds from the Senior Debt. The fair value of the equity was determined using the value of other contributions received from other investors as of the MGM Acquisition Date, which was $36.0 million, and the fair value of the equity using an option pricing model, which was $10.1 million. The purchase price paid in the acquisition has been allocated to record the acquired assets and liabilities assumed at their fair values. When determining the fair value of the assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $216.7 million was recorded. The goodwill recognized was primarily attributable to the product quality track record, workforce, available excess capacity and future cash flows of the acquired business. Approximately 87% of the goodwill is not deductible for tax purposes.
The estimated fair value allocated to property and equipment, identifiable intangible assets and goodwill was determined by management based on a combination of market, cost and income approaches with the assistance of an independent third-party valuation. The estimated useful lives of the customer relationship, trade names, backlog and noncompete agreements are 15 years, 15 years, 1 year and 5 years, respectively. The estimated
 
 
weighted-average useful lives was 13.2 years for finite lived intangible assets. The following table includes the estimated fair value of the assets acquired and the liabilities assumed (in thousands):
 
    
MGM
  
Assets acquired:
   
Cash and cash equivalents
    $ 8,422  
Accounts receivable
      40,163  
Inventory
      47,230  
Prepaid and other current assets
      8,212  
  
 
 
  
Total current assets
      104,027  
Property and equipment
      10,492  
Operating lease right of use assets
      2,702  
Goodwill
      216,733  
Other Intangible assets:
   
Customer relationships
      68,720  
Trade names
      49,640  
Backlog
      15,810  
Noncompete agreements
      3,110  
  
 
 
  
Total assets acquired
      471,234  
  
 
 
  
Liabilities assumed:
   
Accounts payable
      (4,019 ) 
Accrued expenses
      (13,922 ) 
Deferred revenue
      (2,205 ) 
Operating lease liabilities, current portion
      (419 ) 
  
 
 
  
Total current liabilities
      (20,565 ) 
Deferred tax liability
      (23,669 ) 
Operating lease liabilities, less current portion
      (2,283 ) 
  
 
 
  
Total liabilities assumed
      (46,517 ) 
  
 
 
  
Net assets acquired
    $ 424,717  
  
 
 
  
The Company expensed acquisition related costs of $12.0 million related to the MGM Acquisition of which $2.2 million are included in transaction costs for the period from July 1, 2023 to October 31, 2023 (Predecessor) and $9.8 million are included in transaction costs for the period from Inception to June 30, 2024 (Successor).
Acquisition of PwrQ
Affiliates under common control acquired 100% of the outstanding equity of PwrQ on March 13, 2024 in exchange for cash, equity in Forgent Parent II and a payable to the seller. The aggregate purchase price was $103.0 million, consisting of $57.0 million in cash, $44.9 million in equity of Forgent Parent II and a $1.1 million payable to the seller. The cash portion of the purchase price was funded by capital contributions. The acquisition resulted in an ownership change and is being accounted for as a business combination using the acquisition method of accounting. The Company acquired PwrQ to expand its portfolio of electrical distribution products and services. The fair value of the equity determined using the value of other contributions received from other investors as of the acquisition date was $37.8 million and the fair value of the equity using an option pricing model was $7.1 million. The purchase price paid in the acquisition has been allocated to record the acquired assets and liabilities assumed at their fair value based upon their estimated fair value. When determining
 
 
the fair value of the assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $44.7 million was recorded. The goodwill recognized was primarily attributable to the product quality track record, workforce, available excess capacity and future cash flows of the acquired business. Approximately 50% of the goodwill is not deductible for tax purposes. The estimated fair value allocated to property and equipment, identifiable intangible assets and goodwill was determined by management based on a combination of market, cost and income approaches with the assistance of an independent third-party valuation. The estimated useful lives of the customer relationship, trade names, backlog and noncompete agreements are 12 years,
3-5
years, 1 year and 5 years, respectively. The estimated weighted-average useful lives was 9.8 years for finite lived intangible assets. The following table includes the estimated fair value of the assets acquired and the liabilities assumed (in thousands):
 
    
PwrQ
  
Assets acquired:
   
Cash and cash equivalents
    $ 20,125  
Accounts receivable
      21,965  
Inventory
      8,551  
Prepaid and other current assets
      7,612  
  
 
 
  
Total current assets
      58,253  
Property and equipment
      933  
Operating lease right of use assets
      2,545  
Goodwill
      44,709  
Other Intangible assets:
   
Customer relationships
      27,700  
Trade names
      3,200  
Backlog
      2,700  
Noncompete agreements
      4,000  
  
 
 
  
Total assets acquired
      144,040  
  
 
 
  
Liabilities assumed:
   
Accounts payable
      (7,232 ) 
Accrued expenses
      (5,274 ) 
Deferred revenue
      (23,136 ) 
Operating lease liabilities, current portion
      (621 ) 
  
 
 
  
Total current liabilities
      (36,263 ) 
Deferred tax liability
      (2,884 ) 
Operating lease liabilities, less current portion
      (1,924 ) 
  
 
 
  
Total liabilities assumed
      (41,071 ) 
  
 
 
  
Net assets acquired
    $ 102,969  
  
 
 
  
The Company expensed acquisition related costs of $6.7 million related to the acquisition for the period from Inception to June 30, 2024 (Successor), which are included in operating expenses as transaction costs. For the period from Inception to June 30, 2024, PwrQ net sales were $36.0 million and net loss was $1.9 million which are included in revenues and income (loss) before tax benefit (expense), respectively, on the consolidated statements of operations.
 
 
Acquisition of States
Affiliates under common control acquired 100% of the outstanding equity of States on May 31, 2024 in exchange for cash and equity in Forgent Parent III. The aggregate purchase price was $68.5 million, consisting of $37.0 million in cash and $31.5 million in equity of Forgent Parent III. The cash portion of the purchase price was funded by a capital contributions. The acquisition resulted in an ownership change and are being accounted for as a business combination using the acquisition method of accounting. The Company acquired States to expand its portfolio of electrical distribution products and services. The fair value of the equity was determined using the value of other contributions received from other investors as of the acquisition date. The purchase price paid in the acquisition has been allocated to record the acquired assets and liabilities assumed at their fair value based upon their estimated fair value. When determining the fair value of the assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $25.1 million was recorded. The goodwill recognized was primarily attributable to the product quality track record, workforce, available excess capacity and future cash flows of the acquired business. The goodwill is
no
t deductible for tax purposes. The estimated fair value allocated to property and equipment, identifiable intangible assets and goodwill was determined by management based on a combination of market, cost and income approaches with the assistance of an independent third-party valuation. The estimated useful lives of the customer relationship, trade names, backlog and noncompete agreements are 15 years, 15 years, 1.5 years and 5 years, respectively. The estimated weighted-average useful lives was 12.7 years for finite lived intangible assets. The following table includes the estimated fair value of the assets acquired and the liabilities assumed (in thousands):
 
    
States
  
Assets acquired:
   
Cash and cash equivalents
    $ 179  
Accounts receivable
      2,266  
Inventory
      16,793  
Prepaid and other current assets
      150  
  
 
 
  
Total current assets
      19,388  
Property and equipment
      4,212  
Operating lease right of use assets
      2,464  
Goodwill
      25,053  
Other Intangible assets:
   
Customer relationships
      13,234  
Trade names
      21,156  
Backlog
      6,857  
Noncompete agreements
      346  
  
 
 
  
Total assets acquired
      92,710  
  
 
 
  
Liabilities assumed:
   
Accounts payable
      (3,176 ) 
Accrued expenses
      (1,174 ) 
Deferred revenue
      (17,569 ) 
Operating lease liabilities, current portion
      (327 ) 
  
 
 
  
Total current liabilities
      (22,246 ) 
Operating lease liabilities, less current portion
      (1,976 ) 
  
 
 
  
Total liabilities assumed
      (24,222 ) 
  
 
 
  
Net assets acquired
    $ 68,488  
  
 
 
  
 
 
The Company expensed acquisition related costs of $3.5 million related to the acquisition for the period from Inception to June 30, 2024 (Successor), which are included in operating expenses as transaction costs. For the period from Inception to June 30, 2024, States net sales were $5.0 million and net loss was $2.4 million which are included in revenues and income (loss) before tax benefit (expense), respectively, on the consolidated statements of operations.
Acquisition of VanTran
On June 14, 2024, US MetalCo acquired 100% of the outstanding equity of VanTran in exchange for cash, equity in Forgent Parent I and a payable to the sellers. The acquisition resulted in an ownership change and is being accounted for as a business combination using the acquisition method of accounting. The aggregate purchase price was $432.7 million, consisting of $364.0 million in cash, $52.6 million in equity of the Forgent Parent I and a $16.1 million payable to sellers. The cash portion of the purchase price was funded by a capital contribution and proceeds from the Senior Debt. The Company acquired VanTran to expand its portfolio of electrical distribution products and services. The fair value of the equity determined using the value of other contributions received from other investors as of June 14, 2024 was $40.0 million and the fair value of the equity using an option pricing model was $12.6 million. The purchase price paid in the acquisition has been allocated to record the acquired assets and liabilities assumed at their fair value based upon their estimated fair value. When determining the fair value of the assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $230.1 million was recorded. The goodwill recognized was primarily attributable to the product quality track record, workforce, available excess capacity and future cash flows of the acquired business and is not deductible for tax purposes.
The estimated fair value allocated to property and equipment, identifiable intangible assets and goodwill was determined by management based on a combination of market, cost and income approaches with the assistance of an independent third-party valuation. The estimated useful lives of the customer relationship, trade names, backlog and noncompete agreements are 15 years, 15 years, 2 years and 5 years, respectively. The estimated weighted-average useful lives was 12.1 years for finite lived intangible assets. The following table includes the estimated fair value of the assets acquired and the liabilities assumed (in thousands):
 
    
VanTran
  
Assets acquired:
   
Cash and cash equivalents
    $ 53,079  
Accounts receivable
      12,272  
Inventory
      7,630  
Prepaid and other current assets
      2,751  
  
 
 
  
Total current assets
      75,732  
Property and equipment
      12,861  
Operating lease right of use assets
      2,855  
Goodwill
      230,134  
Other Intangible assets:
   
Customer relationships
      103,548  
Trade names
      51,583  
Backlog
      43,087  
Noncompete agreements
      1,398  
  
 
 
  
Total assets acquired
      521,198  
  
 
 
  
 
 
    
VanTran
  
Liabilities assumed:
   
Accounts payable
      (4,499 ) 
Accrued expenses
      (5,446 ) 
Deferred revenue
      (38,977 ) 
Operating lease liabilities, current portion
      (199 ) 
  
 
 
  
Total current liabilities
      (49,121 ) 
Deferred tax liability
      (36,707 ) 
Operating lease liabilities, less current portion
      (2,656 ) 
  
 
 
  
Total liabilities assumed
      (88,484 ) 
  
 
 
  
Net assets acquired
    $ 432,714  
  
 
 
  
The Company expensed acquisition related costs of $5.1 million related to the VanTran acquisition which are included in transaction costs in the consolidated statements of operations for the period from Inception to June 30, 2024 (Successor).
For the period from Inception to June 30, 2024, VanTran net sales were $6.1 million which are included in revenues from the acquisition and $0.1 million included in income (loss) before tax benefit (expense) on the consolidated statements of operations.
Pro Forma Financial Information (unaudited)
The unaudited pro forma financial information below gives effect to the MGM, PwrQ, States and VanTran acquisitions as if they had been completed on July 1, 2023. The pro forma results of operations are presented for informational purposes only. As such, they are not necessarily indicative of the Company’s results had the acquisitions been completed on July 1, 2023, nor do they intend to represent the Company’s future results. The unaudited pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions and does not reflect additional revenue opportunities following the acquisitions. The supplemental pro forma disclosures in the table below include adjustments for (i) depreciation and amortization expense that would have been recognized related to the acquired property and equipment and intangibles, (ii) incremental interest expense associated with borrowings under our Senior Debt, (iii) the estimated income tax effect on the pro forma adjustments (in thousands):
 
    
Year Ended
June 30, 2024
  
Revenues
    $ 482,714  
Net Loss
    $ (28,093 )