v3.26.1
Business Combinations
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations
NOTE 5 — Business Combinations
During the six months ended June 30, 2026, the Company completed two business combinations. The business combinations were individually insignificant acquisitions of Operating Subsidiaries in the United States.
The Company accounts for business combinations using the acquisition method, and accordingly, the consideration paid for each business combination has been allocated based upon the fair value of the assets acquired and liabilities assumed in the business combination.
The following table summarizes the estimated acquisition date fair values of the aggregate assets acquired and liabilities assumed for the six months ended June 30, 2026:
June 30, 2026
Consideration:
Cash$6,386 
Seller Notes at fair value9,689 
Contingent consideration372 
Total consideration transferred16,447 
Fair value of assets acquired and liabilities assumed:
Cash and cash equivalents2,319 
Accounts receivable210 
Inventory7,323 
Prepaid expenses & other assets2 
Trade names806 
Property, plant, and equipment1,136 
Right of use assets4,206 
Accounts payable & accrued liabilities(755)
Lease liabilities(1,906)
Total identifiable assets acquired, net13,340 
Goodwill$3,107 
Seller Notes are a form of noncash consideration paid to the sellers of certain businesses, and are therefore disclosed as non-cash investing activities in the Condensed Consolidated Statements of Cash Flows. See Note 10. The principal balance of the Seller Notes included in the table above was $11.0 million.
The Company determined that the assets acquired in one of the business combinations that was completed during the six months ended June 30, 2026 included two real estate leases with annual rents that were favorable relative to market terms as of the acquisition date. The acquired leases are classified as operating leases, and the Company initially measured the lease liabilities based on the present value of the remaining lease payments, as if the acquired leases were new leases of the Company at the acquisition date. The Company measured the ROU assets as the amount of the lease liabilities adjusted to reflect the favorable terms of the leases when compared with market terms. The Company estimates the fair value of the
favorable lease terms as of the acquisition date using an income approach based on the present value of the difference between market rent and contractual rent over the remaining lease term, discounted at the Company’s incremental borrowing rate as of the acquisition date. The adjustment for off-market terms increased the ROU assets acquired by $2.3 million as of the acquisition date. The amortization of the favorable lease component of the ROU assets will be recognized within Selling, General, and Administrative Expenses in the Condensed Consolidated Statements of Operations on a straight-line basis over the 15 year remaining lease term.
The Company initially acquired 100% of the voting equity interests of the Operating Subsidiaries acquired during the six months ended June 30, 2026. The Company owns preferred stock in each acquired Operating Subsidiary, and the preferred stock owned by the Company has a liquidation preference over common stockholders of each Operating Subsidiary in case of a liquidation event. The liquidation preference is equal to the price per share on the acquisition date adjusted for any additional contributions, stock splits, stock dividends, or similar transactions. The Company also controls the board of directors of each acquired Operating Subsidiary.
Certain historical acquisitions prior to 2023 were acquired for 90% in cash and the issuance of preferred stock to the former owners equal to 10% of all the issued and outstanding stock of the Operating Subsidiaries, calculated on a fully diluted and as-converted basis (the “Rollover Shares”), as of the acquisition date. Rollover Shares are classified as Redeemable Noncontrolling Interests outside of permanent equity in the Company’s Condensed Consolidated Balance Sheets. During the six months ended June 30, 2026, the Company paid $0.5 million to repurchase Rollover Shares held by the former owners of certain Operating Subsidiaries. In comparison, during the six months ended June 30, 2025, the Company paid $0.7 million to repurchase Rollover Shares held by the former owners of certain Operating Subsidiaries. Rollover Share repurchases are included in Acquisitions of Noncontrolling Interests in the Condensed Consolidated Statements of Cash Flows.
The business combinations completed during the six months ended June 30, 2026 were funded by cash on hand and the issuance of debt. See Note 10.
The business combinations completed during the six months ended June 30, 2026 resulted in goodwill totaling $3.1 million. All of the goodwill that was acquired during the six months ended June 30, 2026 was assigned to the SME reportable segment. All of the goodwill generated from the business combination during the six months ended June 30, 2026 is deductible for tax purposes. The determination of the final purchase price allocation to specific assets acquired and liabilities assumed may be subject to change during the measurement period up to one year following the acquisition date.
During the three and six months ended June 30, 2026, the Company recorded measurement period adjustments to Operating Subsidiaries acquired during the year ended December 31, 2025 that increased Goodwill, Net by $0.7 million. See Note 9.
The Company recognized $3.2 million of Revenue and $0.4 million of Net Income Attributable to Teamshares Inc. in the Condensed Consolidated Statements of Operations during the three months ended June 30, 2026, and $3.9 million of Revenue and $0.4 million of Net Income Attributable to Teamshares Inc. during the six months ended June 30, 2026 related to the two Operating Subsidiaries acquired during the six months ended June 30, 2026.
For disclosures of the business combinations completed during the year ended December 31, 2025, refer to Note 4 of the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2025 in the Proxy Statement/Prospectus. The following table summarizes the unaudited pro forma condensed financial information of the
Company as if the business combination during the three and six months ended June 30, 2026, and all business combinations during the year ended December 31, 2025, had occurred on January 1, 2025 (dollars in thousands):
Unaudited
For the Three Months
Ended		For the Six Months
Ended
June 30, 2026June 30, 2025June 30, 2026June 30, 2025
Total Revenue$149,258 $148,970 $273,133 $271,260 
Income (Loss) from Operations (1)3,328 666 (3,754)(10,118)
Net Income (Loss) (2)9,810 (8,430)(12,671)(29,205)
(1)Pro forma adjustments increased Depreciation by $0.1 million during the six months ended June 30, 2026 compared to the Condensed Consolidated Statement of Operations. Pro forma adjustments increased Depreciation by $0.2 million and $0.4 million, respectively, and Amortization by $0.3 million and $0.5 million, respectively, during the three and six months ended June 30, 2025 compared to the Condensed Consolidated Statement of Operations.
(2)Pro forma adjustments increased Interest Expense, Net by $0.1 million during the six months ended June 30, 2026 compared to the Condensed Consolidated Statement of Operations. Pro forma adjustments increased Interest Expense, Net by $1.1 million and $2.2 million, respectively, during the three and six months ended June 30, 2025 compared to the Condensed Consolidated Statement of Operations. Pro forma adjustments for the six months ended June 30, 2025 included the addition of approximately $0.8 million of acquisition-related transaction costs reclassified from the periods in which such costs were incurred to the six months ended June 30, 2025, as if the acquisitions had occurred on January 1, 2025. Pro forma adjustments did not impact Income Tax Expense during the three and six months ended June 30, 2026 or 2025.
Contingent Consideration Agreements

The Company has contingent consideration liabilities related to earnout agreements in certain of its business combinations. The terms of the contingent consideration agreements vary but typically consist of a payout equal to a future percentage of a financial metric (typically revenue or a specified profitability metric) for a determined period of time (usually 1-6 years subsequent to the acquisition date). The Company estimates the future consideration payable related to the contingent consideration agreements and includes it as a current or long-term contingent consideration liability in the Condensed Consolidated Balance Sheets. Changes to the fair value of contingent consideration are recognized in Non-Operating Expense (Income) in the Condensed Consolidated Statements of Operations.
As of June 30, 2026 and December 31, 2025, respectively, the fair value of contingent consideration liabilities was $9.0 million and $9.2 million. As of June 30, 2026 and December 31, 2025, respectively, $2.7 million and $3.2 million is considered a current liability expected to be paid out within the next year, and $6.3 million and $6.0 million is considered a long-term liability expected to be paid out more than a year from the reporting date. The Company recognized losses of $0.9 million and $0.9 million related to the changes in fair value of contingent consideration agreements during the three and six months ended June 30, 2026, respectively. The Company recognized losses of $0.4 million and $0.3 million related to the changes in fair value of contingent consideration agreements during the three and six months ended June 30, 2025, respectively.
As of June 30, 2026, the Company had 31 Operating Subsidiaries with contingent consideration liabilities, which all contain a cap on the maximum amount payable. As of June 30, 2026, the maximum amount of contingent consideration payable in the future totaled $34.6 million.
During the six months ended June 30, 2026 and 2025, respectively, the Company made payments related to the contingent consideration agreements of $1.3 million and $1.0 million. Contingent consideration payments were not made soon after the applicable acquisition date and therefore are recognized as financing activities in the Condensed Consolidated Statements of Cash Flows, up to the estimated fair value of the obligation as of the acquisition date. Payments in excess of the original acquisition date fair value are recognized as operating activities in the Condensed Consolidated Statements of Cash Flows. The Company recognized $0.5 million and $0.8 million of payments related to contingent consideration agreements as operating activities, and $0.8 million and $0.2 million of payments related to contingent consideration
agreements as financing activities in the Condensed Consolidated Statements of Cash Flows during the six months ended June 30, 2026 and 2025, respectively.