Company: CODI-PB
Filing Date: 2025-12-08
Form Type: 10-K/A
Source: 0001345126-25-000078
Chunk: 257

Company: Compass Diversified Holdings
Filing Date: 2025-12-08
Form: 10-K/A
Chunk 257
---
, and operating results were below forecast amounts that were used as the basis for the purchase price allocation performed when Lugano was acquired. Therefore the Company determined that a triggering event had occurred. The Company performed the quantitative impairment test using an income approach. The prospective information used in the income approach considered macroeconomic data, industry and reporting unit specific facts and circumstances and was our best estimate of operational results and cash flows for the Lugano reporting unit as of the date of our impairment testing. The discount rate used in the income approach was 12.0% The results of the quantitative impairment testing indicated that the fair value of the Lugano reporting unit did not exceed its carrying value, resulting in goodwill impairment expense of $ 237.2million in the year ended December 31, 2021.

#### Note D — Acquisition of Businesses
The acquisitions of our businesses are accounted for under the acquisition method of accounting. For each new platform acquisition, the Company typically structures the transaction so that a newly created holding company acquires 100% of the equity interests in the acquired business. The entirety of the purchase consideration is paid by the newly created holding company to the selling shareholders. The total purchase consideration is the amount paid to the selling shareholders and we will, from time to time, allow the selling shareholder to reinvest a portion of their proceeds alongside the Company at the same price per share, into the holding company that acquires the target

<div align='center'>F-35</div>

### COMPASS DIVERSIFIED HOLDINGS

### NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
business. Once the acquisition is complete, the selling shareholders no longer hold equity interests in the acquired company, but rather hold noncontrolling interest in the holding company that acquired the target business. Because the selling shareholders are investing in the transaction alongside the Company at the same price per share as the Company and are not retaining their existing equity in the acquired business, the Company includes the amount provided by noncontrolling shareholders in the total purchase consideration.

A component of our acquisition financing strategy that we utilize in acquiring the businesses we own and manage is to provide both equity capital and debt capital, raised at the parent level, typically through our existing credit facility. The debt capital is in the form of “intercompany loans” made by the LLC to the newly created holding company and the acquired business and are due from the newly created holding company and the acquired business, and payable to the LLC by the newly created holding company and the acquired business. The selling shareholders of the acquired businesses