v3.26.1
Business Combinations
 6 Months Ended
Jun. 30, 2026
Business Combination [Abstract]  
Business Combinations

NOTE 3. Business Combinations

 

DealerClub Acquisition. In January 2025, the Company acquired all of the outstanding stock of DealerClub Inc. ("DealerClub"), an emerging dealer-to-dealer digital wholesale auction platform that facilitates transparent and efficient transactions between automotive dealers (the "DealerClub Acquisition"). The total purchase consideration was $25.3 million. The Company expensed as incurred total acquisition costs of $0.2 million during the three months ended March 31, 2025. These costs were recorded in General and administrative expenses in the Consolidated Statements of Income.

 

As part of the DealerClub Acquisition, the Company may be required to pay additional performance-based consideration of up to $88.0 million, which may be paid in cash, or stock if mutually agreed upon. This potential performance-based consideration is not included in the total purchase consideration and will be deemed compensation expense. The amount to be paid will be determined by DealerClub's future achievement of certain revenue-related financial targets through December 31, 2028, and will be expensed over the relevant performance periods. Based on current performance trends, no such consideration was expensed during the three and six months ended June 30, 2026.

 

Purchase Price Allocation. The fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management’s final estimates and assumptions, as well as other information compiled by management, including third-party valuations that utilize customary valuation procedures and techniques, such as the replacement cost method. The final DealerClub Acquisition purchase price allocation is as follows (in thousands):

 

Acquisition Date
Fair Value

 

Total purchase consideration

$

25,331

 

 

 

Cash and cash equivalents

$

562

 

Other assets acquired (1)

 

961

 

Identified intangible assets (2)

 

2,700

 

     Total assets acquired

 

4,223

 

     Total liabilities assumed (3)

 

(872

)

Net identifiable assets

 

3,351

 

Goodwill

 

21,980

 

Total purchase consideration

$

25,331

 

 

(1)
Other assets acquired primarily consists of deferred income tax assets and other receivables.
(2)
Identified intangible assets consists of acquired software with an amortization period of five years.
(3)
Liabilities assumed primarily consists of other accrued liabilities.

 

A reconciliation of cash consideration to Payments for acquisitions, net of cash acquired related to the DealerClub Acquisition in the Consolidated Statements of Cash Flows is as follows (in thousands):

Cash consideration

$

25,331

 

Less: Cash acquired

 

(562

)

Total payment for DealerClub Acquisition, net

$

24,769

 

 

Goodwill. In connection with the DealerClub Acquisition, the Company recorded goodwill in the amount of $22.0 million, which is primarily attributable to expected sales growth from existing and future customers, product offerings, technology and the value of the acquired assembled workforce. All of the goodwill is considered non-deductible for income tax purposes.