v3.26.3
Acquisitions
 9 Months Ended
Sep. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisitions Acquisitions
The Company spent $5,345.8 million in cash, net of cash acquired, to acquire LKC Technologies ("LKC") in January 2026, First Aviation Services, Inc. ("First Aviation") in May 2026, and Indicor Instrumentation ("Indicor") in August 2026. LKC is a leading provider of innovative technologies to enable the effective diagnosis and management of ophthalmic conditions. LKC is part of EIG. First Aviation is a leading provider of highly engineered, mission-critical defense and aviation maintenance, repair and overhaul services and a manufacturer of related proprietary components. First Aviation has annual sales of approximately $80 million. First Aviation is part of EMG. Indicor is a collection of leading businesses that design and manufacture mission critical solutions for demanding industrial and scientific applications. Indicor has annual sales of approximately $1.1 billion. Indicor businesses are part of EIG and EMG based on product offerings and market alignment.
The following table represents the allocation of the purchase price for the net assets of the LKC, First Aviation, and Indicor acquisitions based on the estimated fair values at acquisition (in millions):
IndicorOther AcquisitionsTotal
Property, plant and equipment$55.9 $22.2 $78.1 
Goodwill2,698.5 221.7 2,920.2 
Other intangible assets2,454.1 185.5 2,639.6 
Deferred income taxes(380.7)(32.0)(412.7)
Net working capital and other(1)
326.3 38.1 364.4 
Total purchase price$5,154.1 $435.5 $5,589.6 
Less: Acquisition date fair value of cash acquired(232.7)(11.1)(243.8)
Total cash paid$4,921.4 $424.4 $5,345.8 
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(1)Includes $157.7 million in accounts receivable, whose fair value, contractual cash flows and expected cash flows are approximately equal.
The amount allocated to goodwill is reflective of the benefits the Company expects to realize from the acquisitions. LKC's design and engineering capabilities complement the Company's existing ultra precision technologies business. First Aviation's proprietary products and services complement the Company's existing maintenance, repair and overhaul business. Indicor's products serve customers across end markets that closely align with the Company's existing portfolio of instrumentation businesses.
At September 30, 2026, the purchase price allocated to other intangible assets of $2,639.6 million consists of $374.2 million of indefinite-lived intangible trade names, which are not subject to amortization. The remaining $2,265.4 million of other intangible assets consists of $1,835.6 million of customer relationships, which are being amortized over a period of 17 to 20 years, and $429.8 million of purchased technology, which is being amortized over a period of 15 to 17 years. Amortization expense for each of the next five years for the 2026 acquisitions is expected to approximate $133 million per year.
The acquisitions had an immaterial impact on reported net sales, net income, and diluted earnings per share for the three and nine months ended September 30, 2026.
Unaudited pro forma information for the three and nine months ended September 30, 2026 and 2025 gives effect to the Indicor, LKC, and First Aviation acquisitions as if they had occurred as of January 1, 2025, including the results from operations for the acquired businesses. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time.
Had the Indicor, LKC, and First Aviation acquisitions been made at the beginning of 2026, unaudited pro forma net sales would have been approximately 8% and 11% higher than reported amounts for the three and nine months ended September 30, 2026, respectively. Had the acquisitions been made at the beginning of 2025, unaudited pro forma net sales would have been approximately 15% higher than reported amounts for the three and nine months ended September 30, 2025.
Unaudited pro forma net income and diluted earnings per share would not have been materially different than reported amounts for the three and nine months ended September 30, 2026 and 2025, considering the impacts of assumed financing of the transactions and the amortization of acquired intangible assets.
The Company finalized its measurements of tangible and intangible assets and liabilities, as well as the associated income tax considerations, for its July 2025 acquisition of FARO Technologies and its January 2026 acquisition of LKC and May 2026 acquisition of First Aviation, which had no material impact to the consolidated statement of income.
The initial accounting for the Indicor acquisition is incomplete, related to finalizing the measurement of the acquired tangible and intangible assets and liabilities. All amounts could change, potentially materially, as there is significant additional information that the Company must obtain to finalize the valuations of the tangible assets acquired and liabilities assumed, and to finalize the value of the intangible assets, primarily due to the proximity of the acquisition date to the balance sheet date of September 30, 2026. As of September 30, 2026, the Company is in the process of finalizing the tax valuations and purchase
price allocations across local tax jurisdictions. While a portion of the recorded goodwill is expected to be deductible for income tax purposes, the final allocation and exact tax-deductible goodwill amount cannot be reasonably estimated at this time.
In January 2025, the Company acquired Kern Microtechnik ("Kern"). The Kern acquisition included an $8.9 million estimated fair value contingent payment due upon Kern achieving certain cumulative revenue and EBITDA targets over the period January 1, 2025 to January 1, 2027. The contingent liability was based on a probabilistic approach using level 3 inputs. At September 30, 2026, we have adjusted the estimated fair value of the contingent payment liability to $10.5 million. For the three and nine months ended September 30, 2026, the change in the fair value of the contingent consideration liability was recorded in "Other (expense) income, net" in the consolidated statement of income.