Company: ACTG
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0000934549-25-000042
Chunk: 31

Company: ACACIA RESEARCH CORP
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 1
Chunk 31
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 and liabilities remain provisional and may be subject to further adjustments during the measurement period, not to exceed one year from the date of acquisition. The final purchase price allocation is expected to be completed by the end of 2025 and will be based on the final working capital adjustments and other analysis of fair values of acquired assets and liabilities.Intangible AssetsGoodwill of $16.8 million represents the excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed. The goodwill recognized is primarily attributed to the assembled workforce of Deflecto and new customer relationships that did not exist at the time of the transaction. None of the goodwill resulting from the acquisition is deductible for tax purposes. All of the goodwill acquired is allocated to the Deflecto reporting unit. Other 

21

intangible assets include $22.4 million of customer relationships, $1.0 million of developed technology, $9.1 million of trade names and trademarks and $704,000 of favorable leases, with useful lives ranging from 2 months to 15 years. Trade names and trademarks include indefinite lived intangible assets. Refer to Note 8 for additional information.The fair values of all intangibles were estimated using the income approach. Specifically, the multi-period excess earnings method was applied in the valuation of the customer relationships, and the relief-from-royalty method was applied in the valuation of the trade names and trademarks. These fair value measurements are based on significant inputs unobservable in the market and, therefore, represent a Level 3 measurement as defined in ASC 820. The key assumptions in applying the multi-period excess earnings method include the discount rate of 22%, growth rate, attrition rate, estimated profit margin and contributory asset charges. The key assumptions in applying the relief-from-royalty method include the applicable projected revenues, discount rate of 22%, remaining economic life or rate of obsolescence and estimated royalty rate. Refer to Note 13 for additional information related to fair value measurements.

4. EQUITY SECURITIES

Equity securities for the periods presented were comprised of the following:Security TypeCostGross Unrealized GainGross Unrealized LossFair Value(In thousands)June 30, 2025:Equity securities - other common stock$25,789 $7 $(4,329)$21,467 Total$25,789 $7 $(4,329)$21,467 December 31, 2024:Equity securities - other common stock$24,898