v3.26.3
Business Combinations
 6 Months Ended 12 Months Ended
Jun. 30, 2026
Dec. 31, 2025
Business Combination [Line Items]    
Business Combinations

Note 3. Business Combinations

MagCanica

On June 1, 2026, the Company acquired a 100% equity interest in MagCanica, LLC (“MagCanica”), a designer and manufacturer of non-contact, high-precision torque sensors that operate under extreme conditions. The acquisition complements the Company's existing military flexible driveshaft capabilities and addresses a growing need across aerospace and defense for real-time monitoring of mission-critical rotating systems. The total consideration of $117,739 is preliminary and subject to the resolution of customary closing adjustments which have not yet been finalized. The acquisition was funded by cash on hand.

The preliminary purchase price allocation to the underlying assets acquired and liabilities assumed based on their fair values as of the acquisition date consisted of total assets acquired of $120,055, including $70,300 of intangible assets, $43,231 of goodwill, and $6,524 of all other current and non-current assets, with $2,316 of assumed total liabilities. Goodwill was primarily attributable to synergies and economies of scale expected from combining the operations of the Company and MagCanica. Substantially all of the goodwill is expected to be deductible for tax purposes, subject to finalization of the purchase price allocation.

Micro-Tronics

On January 5, 2026, the Company acquired a 100% equity interest in Micro-Tronics, LLC (“Micro-Tronics”), a leading provider of engineered, mission-critical elastomeric and metallic components for commercial aerospace and defense applications. The acquisition expands the Company's product line into adjacent and overlapping capabilities, ranging from elastomeric diaphragm seals and assemblies to high-precision electrical discharge machined components. The total consideration was $71,609 and the acquisition was funded by $25,000 of proceeds from a draw on the 2025 DDTL (as defined below in "Note 11. Debt") and cash on hand.

The purchase price allocation to the underlying assets acquired and liabilities assumed based on their fair values as of the acquisition date consisted of total assets acquired of $75,259, including $26,400 of intangible assets, $18,223 of goodwill, $16,130 of property, plant, and equipment, and $14,506 of all other current and non-current assets, with $3,650 of assumed total liabilities. Goodwill was primarily attributable to synergies and economies of scale expected from combining the operations of the Company and Micro-Tronics. Substantially all of the goodwill is expected to be deductible for tax purposes, subject to finalization of the purchase price allocation.

Oldham Seals Group Limited

On June 27, 2025, the Company acquired a 100% equity interest in Oldham Seals Group Limited (“Oldham”), a Chichester, England based company that designs and manufactures highly engineered elastomeric and polymer products for the naval and civilian shipping, oil and gas, and traction industries. The total consideration consisted of $115,099 of cash and $331 of deferred consideration. The acquisition was funded by $92,000 of borrowings under the Company’s existing debt instruments and cash on hand.

The purchase price allocation to the underlying assets acquired and liabilities assumed based on their fair values as of the acquisition date consisted of total assets acquired of $135,222, including $58,586 of goodwill, $54,532 of intangible assets, $10,690 of cash and cash equivalents, $4,842 of property, plant and equipment, and $6,572 of all other current and non-current assets, with $19,792 of assumed total liabilities, which includes $14,924 of deferred tax liabilities. Goodwill was primarily attributable to synergies and economies of scale expected from combining the operations of the Company and Oldham. Goodwill is not deductible for tax purposes.

Spira Manufacturing Corporation

On January 8, 2025, the Company acquired a 100% equity interest in Spira Manufacturing Corporation (“Spira”), which specializes in custom manufacturing of electromagnetic interference and radio-frequency interference shielding gaskets and products. The total consideration consisted of $49,916 of cash and $551 of deferred consideration. The acquisition was funded by $42,000 of borrowings under the Company’s existing debt instruments and cash on hand. As of June 30, 2026, all deferred consideration was paid.

The purchase price allocation to the underlying assets acquired and liabilities assumed based on their fair values as of the acquisition date consisted of total assets acquired of $60,757, including $27,933 of goodwill, $21,700 of intangible assets, $2,635 of property, plant, and equipment, and $8,489 of all other current and non-current assets, with $10,290 of assumed total liabilities, which includes $5,658 of deferred tax liabilities. Goodwill was primarily attributable to synergies and economies of scale expected from combining the operations of the Company and Spira. Goodwill is not deductible for tax purposes.

Pro forma revenue and net income have not been presented for MagCanica, Micro-Tronics, Oldham, and Spira because the financial results are, individually and in the aggregate, not material to the condensed consolidated financial statements in any period presented.

Note 3. Business Combinations

Oldham Seals Group Limited

On June 27, 2025, the Company acquired 100% equity interest in Oldham Seals Group Limited (“Oldham”), a Chichester, England based company that designs and manufactures highly engineered elastomeric and polymer products for the naval and civilian shipping industry, oil and gas and traction industries. The total consideration comprised $115,099 of cash and $331 of deferred consideration. The acquisition was funded by proceeds of $92,000 from the Company’s 2025 Revolver (as defined below in “Note 11. Debt”) and cash on hand.

The following table summarizes the purchase price allocation to the underlying assets acquired and liabilities assumed based on their fair values as of the acquisition date:

 

 

Estimated Fair Value

 

Cash and cash equivalents

 

$

10,690

 

Accounts receivable

 

 

1,979

 

Inventories

 

 

2,064

 

Prepaid expenses and other current assets

 

 

524

 

Property, plant and equipment

 

 

4,842

 

Operating lease right-of-use assets

 

 

2,005

 

Intangible assets

 

 

54,532

 

Goodwill

 

 

58,586

 

Total assets acquired

 

 

135,222

 

Accounts payable

 

 

1,651

 

Operating lease liabilities, current

 

 

442

 

Accrued expenses and other current liabilities

 

 

1,308

 

Operating lease liabilities, noncurrent

 

 

1,467

 

Deferred tax liabilities

 

 

14,924

 

Total liabilities assumed

 

 

19,792

 

Net assets and liabilities

 

$

115,430

 

 

The Company recognized goodwill for the excess of the purchase price over the fair value of net assets acquired. Goodwill was primarily attributable to synergies and economies of scale expected from combining the operations of the Company and Oldham. Goodwill is not deductible for tax purposes.

Transaction expenses paid by the Company in connection with the above acquisition amounted to $2,146 for the year ended December 31, 2025, and are included within Selling, general and administrative expenses in the Combined Statements of Operations.

Spira Manufacturing Corporation

On January 8, 2025, the Company acquired 100% equity interest in Spira Manufacturing Corporation (“Spira”), which specializes in custom manufacturing of electromagnetic interference and radio-frequency interference shielding gaskets and products. The total consideration comprised $49,916 of cash and $551 of deferred consideration. The acquisition was funded by $42,000 of proceeds from the issuance of debt from the Company’s Credit Facility 1.0 and cash on hand.

The following table summarizes the purchase price allocation to the underlying assets acquired and liabilities assumed based on their fair values as of the acquisition date:

 

 

Estimated Fair Value

 

Cash and cash equivalents

 

$

1,205

 

Accounts receivable

 

 

1,332

 

Inventories

 

 

2,854

 

Property, plant and equipment

 

 

2,635

 

Operating lease right-of-use assets

 

 

3,098

 

Intangible assets

 

 

21,700

 

Goodwill

 

 

27,933

 

Total assets acquired

 

 

60,757

 

Accounts payable

 

 

146

 

Contract liabilities

 

 

1,083

 

Operating lease liabilities, current

 

 

460

 

Accrued expenses and other current liabilities

 

 

305

 

Operating lease liabilities, noncurrent

 

 

2,638

 

Deferred tax liabilities

 

 

5,658

 

Total liabilities assumed

 

 

10,290

 

Net assets and liabilities

 

$

50,467

 

 

The Company recognized goodwill for the excess of the purchase price over the fair value of net assets acquired. Goodwill was primarily attributable to synergies and economies of scale expected from combining the operations of the Company and Spira. Goodwill is not deductible for tax purposes.

Transaction expenses paid by the Company in connection with the above acquisition amounted to $1,003 for the year ended December 31, 2025, and are included within Selling, general and administrative expenses in the Combined Statements of Operations.

Pro forma revenue and net income have not been presented for Spira and Oldham because the financial results of Spira and Oldham, individually and in the aggregate, are not material to the combined financial statements in any period presented.

Arxis Businesses Transaction

On September 30, 2024, the equity interests of Arcline Engineered Polymer Topco, L.P., Hawkeye TopCo, L.P., Connector TopCo, L.P., and Ovation TopCo, L.P., were contributed to a newly-formed limited partnership series-entity (the “Arxis

Businesses Transaction”). The Arxis Businesses Transaction brought these entities under common control and resulted in a business combination within the scope of ASC 805.

Arcline Engineered Polymer Topco, L.P. and Hawkeye TopCo, L.P., which were under common control for all periods presented including prior to September 30, 2024, were determined to be the accounting acquirer group in accordance with ASC 805. The total consideration of $2,389,897 represents the amount equal to the estimated fair value of equity exchanged in the Arxis Businesses Transaction by the limited partner holders of the acquired businesses, Connector TopCo, L.P. and Ovation TopCo, L.P., as of the date of the Arxis Businesses Transaction. The acquisition date fair value of equity exchanged for the acquired businesses was determined in consultation with third-party valuation advisors based on an estimated enterprise value, using a combination of the income and market approaches, reduced by borrowings assumed. The determination of the fair value of equity exchanged required the Company to make significant estimates and assumptions related to future cash flows, discount rates, and selection of comparable companies. The total consideration does not include the amount attributable to the entities that have been excluded from Ovation TopCo, L.P. as described in “Note 2. Summary of Significant Accounting Policies.” The Company acquired cash as part of the Arxis Businesses Transaction, but there was no cash consideration exchanged as part of the Arxis Businesses Transaction.

The combined financial statements include the operations of the acquired businesses from the date of the Arxis Businesses Transaction, which is the acquisition date. The Company accounted for the acquired businesses using the acquisition method of accounting, which requires, among other things, assets acquired and liabilities assumed to be recognized at their estimated fair values as of the acquisition date.

The following table summarizes the purchase price allocation to the underlying assets acquired and liabilities assumed based on their fair values as of the acquisition date:

 

 

Estimated Fair Value

 

Cash and cash equivalents

 

$

46,900

 

Accounts receivable

 

 

139,756

 

Contract assets

 

 

13,837

 

Inventories

 

 

251,426

 

Prepaid expenses and other current assets

 

 

33,734

 

Property, plant and equipment

 

 

334,462

 

Intangible assets

 

 

1,797,352

 

Goodwill

 

 

1,778,438

 

Operating lease right-of-use assets

 

 

24,714

 

Other assets

 

 

39,730

 

Total assets acquired

 

 

4,460,349

 

Accounts payable

 

 

31,380

 

Contract liabilities, current

 

 

4,911

 

Operating lease liabilities, current

 

 

4,420

 

Debt, current

 

 

14,382

 

Accrued expenses and other current liabilities

 

 

97,253

 

Debt, noncurrent

 

 

1,454,776

 

Contract liabilities, noncurrent

 

 

2,435

 

Operating lease liabilities, noncurrent

 

 

19,916

 

Deferred tax liabilities

 

 

306,039

 

Other long-term liabilities

 

 

134,940

 

Total liabilities assumed

 

 

2,070,452

 

 

Estimated Fair Value

 

Net assets and liabilities

 

$

2,389,897

 

 

The Company recognized goodwill for the excess of the purchase price over the fair value of net assets acquired. Goodwill was primarily attributable to synergies and economies of scale expected from combining the operations of the Company. For tax purposes, the Arxis Businesses Transaction was classified as a stock acquisition, so the Company retained its tax basis in underlying assets, including tax-deductible goodwill. At the time of acquisition, there was $245,975 in carryover tax-deductible goodwill, with no new tax-deductible goodwill created as part of the transaction.

The following table presents the amounts allocated to the intangible assets identified at the acquisition date and the estimated useful lives:

 

 

Weighted-Average
Remaining Useful Lives
(in years)

 

 

Estimated Fair
Value

 

Trademarks

 

 

17

 

 

$

176,500

 

Customer relationships

 

 

24

 

 

 

1,337,200

 

Patents and technology

 

 

17

 

 

 

283,652

 

Total intangible assets acquired

 

 

 

 

$

1,797,352

 

 

The Company assumed certain debt instruments in the Arxis Businesses Transaction which were recorded on the acquisition date at their fair values and determined to equal their notional amounts. Refer to “Note 11. Debt” for further details on the debt assumed and subsequently extinguished in 2025.

Pro forma financial information (unaudited)

The following unaudited pro forma financial information summarizes the Combined Results of Operations of the Company, and both Connector TopCo, L.P. and Ovation TopCo, L.P., as if each had been acquired as of January 1, 2023:

 

 

Year Ended December 31,

 

 

2024

 

 

2023

 

Revenue

 

$

1,389,563

 

 

$

1,237,918

 

Net loss

 

$

(196,078

)

 

$

(222,281

)

 

The pro forma financial information for all periods presented above has been calculated after adjusting the results of operations to reflect certain business combination effects, including the amortization of the acquired intangibles, depreciation of acquired property, plant and equipment, interest expense, share-based compensation expense, and other purchase accounting impacts as though the Arxis Businesses Transaction occurred as of January 1, 2023. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2023, nor are they intended to be indicative of results that may occur in the future.

RMB Products, Inc.

On August 28, 2024, the Company acquired 100% equity interest in RMB Products, Inc. (“RMB”) in order to enhance its capabilities in advanced polymer solutions. RMB specializes in custom manufacturing and engineered polymers for the aerospace, chemical processing, semiconductor, and biopharmaceutical industries. The total consideration transferred was

$48,618. The acquisition was funded by the proceeds of a $50,000 term loan from the Credit Facility 1.0, net of deferred financing costs of $998.

The following table summarizes the purchase price allocation to the underlying assets acquired and liabilities assumed based on their fair values as of the acquisition date:

 

 

Estimated Fair Value

 

Cash and cash equivalents

 

$

1,416

 

Accounts receivable

 

 

3,292

 

Inventories

 

 

5,725

 

Prepaid expenses and other current assets

 

 

2,632

 

Property, plant and equipment

 

 

5,738

 

Intangible assets

 

 

17,700

 

Goodwill

 

 

28,871

 

Operating lease right-of-use assets

 

 

5,991

 

Total assets acquired

 

 

71,365

 

Accrued expenses and other current liabilities

 

 

11,865

 

Operating lease liabilities, noncurrent

 

 

5,726

 

Deferred tax liabilities

 

 

5,156

 

Total liabilities assumed

 

 

22,747

 

Net assets and liabilities

 

$

48,618

 

 

The Company recognized goodwill for the excess of the purchase price over the fair value of net assets acquired. Goodwill was primarily attributable to synergies and economies of scale expected from combining the operations of the Company and RMB. Goodwill is not deductible for tax purposes.

Transaction expenses paid by the Company in connection with the above acquisition amounted to $1,105 for the year ended December 31, 2024, and are included within Selling, general and administrative expenses in the Combined Statements of Operations.

Pro forma revenue and net income have not been presented because the financial results of RMB are not material to these combined financial statements in any period presented.

M-Wave Design Corporation

On May 9, 2024, the Company acquired 100% equity interest in M-Wave Design Corporation (“M-Wave”) in order to expand its product offering to customers. M-Wave specializes in designing and manufacturing RF and microwave components, including isolators, circulators, adaptors, and terminations, for applications in aerospace, defense, and specialized industrials. The total consideration of $12,358 was comprised of $7,508 of cash, $4,000 of rollover equity and $850 of contingent consideration.

The following table summarizes the purchase price allocation to the underlying assets acquired and liabilities assumed based on their fair values as of the acquisition date:

 

 

Estimated Fair Value

 

Cash and cash equivalents

 

$

1,202

 

Accounts receivable

 

 

672

 

Inventories

 

 

423

 

Property, plant and equipment

 

 

56

 

Intangible assets

 

 

9,400

 

Goodwill

 

 

1,675

 

Total assets acquired

 

 

13,428

 

Accounts payable

 

 

101

 

Accrued expenses and other current liabilities

 

 

38

 

Contract liabilities

 

 

931

 

Total liabilities assumed

 

 

1,070

 

Net assets and liabilities

 

$

12,358

 

 

The contingent consideration is a cash-based arrangement and requires the Company to pay the former owners a specific amount for each of two measurement periods based on adjusted EBITDA targets. The potential undiscounted amount of future payments that the Company could be required to make under the contingent consideration arrangement is between $0 and $5,000. The fair value of the contingent consideration arrangement of $850 was estimated using internal forecasts to determine the most likely outcome. Contingent consideration outstanding during the periods presented is recorded at fair value based on unobservable inputs and is considered a Level 3 liability.

The Company had contingent consideration related to the M-Wave acquisition of $2,600 and $850 included in Accrued expenses and other current liabilities on the Combined Balance Sheets as of December 31, 2025 and 2024, respectively. The Company recognized goodwill for the excess of the purchase price over the fair value of net assets acquired. Goodwill was primarily attributable to synergies and economies of scale expected from combining the operations of the Company and M-Wave. Goodwill recognized is deductible for tax purposes.

Transaction expenses paid by the Company in connection with the above acquisition amounted to $376 for the year ended December 31, 2024, and are included within Selling, general and administrative expenses in the Combined Statements of Operations.

Pro forma revenue and net income have not been presented because the financial results of M-Wave are not material to the combined financial statements in any period presented.