Acquisitions |
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| Acquisitions | 5. Acquisitions On April 26, 2026, Real entered into a definitive agreement (the “Agreement”) to acquire REMAX (the “Transaction”). On August 24, 2026, both Real and REMAX became subsidiaries of the Company, with Real being the accounting acquirer. The Transaction resulted in the combination of Real and REMAX under Real REMAX Group Inc., whose common shares trade on the Nasdaq Global Select Market under the symbol “REAX”. In connection with the Transaction, the Company obtained $550 million of debt financing (refer to Note 9, Debt). The proceeds were used to fund a portion of the acquisition consideration, refinance REMAX’s existing indebtedness, and pay related transaction expenses. The following table summarizes the individual elements within the calculation of total consideration transferred (in thousands):
The following table summarizes the allocation of consideration transferred to the estimated fair values of the net assets acquired by the Company as of the acquisition date (in thousands):
Identifiable Intangible Assets and Goodwill The intangible assets above were recorded at fair value in accordance with the acquisition method of accounting. The Company recognized $300.0 million of acquired franchise agreements and $205.0 million of trademarks and trade names. The Company applied the multi-period excess earnings method to value the franchise agreements and the relief from royalty method to value the trade names. These valuations required significant judgment, estimates, and assumptions, including discount rates, revenue growth rates, projected margins, franchisee retention rates and royalty rates. Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. Indefinite-lived intangible assets are initially recorded at fair value and are not amortized. They are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable. The Company recognized $327.9 million of goodwill allocated to the Franchise reporting unit, primarily attributable to anticipated benefits from the combination, including opportunities to expand the Company's current and future product and service offerings across the combined network and the value of the assembled workforce. The goodwill recorded in connection with the Transaction is not expected to be deductible for tax purposes. Provisional Purchase Price Allocation The Company has recorded the provisional purchase price allocation as of the acquisition date and expects to finalize its analysis within the measurement period (up to one year from the acquisition date) of the transaction. Any adjustments during the measurement period would have a corresponding offset to goodwill. Upon conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments will be recorded to the Condensed Consolidated Statements of Comprehensive Income (Loss). The amounts above are provisional as the Company has not yet finalized its valuation of the intangible assets and goodwill with its third-party valuation firm or its evaluation of the acquired deferred tax assets and other income tax matters. Merger Transaction and Integration Expenses In connection with the Transaction, the Company incurred approximately $52.3 million and $64.2 million in merger and integration expenses, respectively, during the three and nine months ended September 30, 2026. These expenses consisted of professional services, consulting, legal, investment banking, and other transaction-related costs, as well as severance and other personnel-related costs, all of which were expensed as incurred. These expenses are included in “Acquisition costs and integration expenses” in the Condensed Consolidated Statements of Comprehensive Income (Loss). The following table summarizes the acquisition-related and integration expenses incurred during the three and nine months ended September 30, 2026 (in thousands):
In addition to the above, the Company recognized $27.2 million of stock-based compensation for the three and nine months ended September 30, 2026, primarily related to the acceleration of certain equity awards in connection with the Transaction, including awards accelerated upon the termination of certain employees in connection with the Transaction. Stock-based compensation expense is included as a component of “General and administrative expenses” in the Condensed Consolidated Statements of Comprehensive Income (Loss). Unaudited Pro Forma Financial Information Pro forma financial information reflects the consolidated results of operations of the Company as if the Transaction had occurred on January 1, 2025. The pro forma information presented below is for illustrative purposes only and should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the Transaction had actually occurred on that date, nor of the results that may be obtained in the future (in thousands).
The unaudited pro forma results in the table above include adjustments for debt issuance, accelerated stock-based compensation, additional amortization of acquired finite-lived intangible assets, adjustments for lease costs and the related tax effects assuming the Transaction occurred on January 1, 2025. |
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