Company: DXPE
Filing Date: 2025-04-30
Form Type: ARS
Source: 0001020710-25-000081
Chunk: 97

Company: DXP ENTERPRISES INC
Filing Date: 2025-04-30
Form: ARS
Chunk 97
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,207) Net assets acquired 18,182 25,233 16,067 5,705 65,187 Goodwill $ 28,611 $ 56,305 $ 20,694 $ 4,122 $ 109,732 The total cash and cash equivalents acquired for these seven acquisitions was $5.5 million. Transaction-related costs included within selling, general, and administrative expenses in the consolidated statements of operations was $1.6 million for the twelve months ended December 31, 2024. The goodwill total of approximately $109.7 million is attributable primarily to expected synergies and the assembled workforce of each entity of which $22.6 million is deductible for tax purposes and $87.1 million is not deductible for tax purposes. Goodwill assigned to our SC and IPS segments as a result of these transactions was $66.2 million and $43.5 million, respectively. Of the $41.6 million of acquired intangible assets, $2.3 million was provisionally assigned to non-compete agreements that are subject to amortization over 5 years and $3.7 million was assigned to trade names and will be amortized over a period of 10 years. In addition, $35.6 million was assigned to customer relationships and will be amortized over a period of 8 years. Contingent Consideration The acquisitions included contingent consideration arrangements that requires additional consideration to be paid based on the achievement of annual EBITDA targets over a one to three year period. The range of undiscounted amounts the Company may be required to pay under the contingent consideration agreement is between zero and $14.2 million. The combined fair value of the contingent consideration recognized on each acquisition date of $11.9 million was estimated by using a weighted probability of possible payments. That measure is based on significant Level 3 inputs not observable in the market. The significant assumption includes a discount rate of 9.8%. Changes in the fair value measurement each period reflect the passage of time as well as the impact of adjustments, if any, to the likelihood of achieving the specified targets. The changes in the fair value of the contingent consideration are measured during each reporting period and reflected in our results of operations. The fair value measurement includes earnings forecasts which are a Level 3 measurement as discussed in Note 5 - Fair Value of Financial Assets and Liabilities. The fair value of the contingent consideration is reviewed quarterly over the earn-out period to compare actual earnings before interest, taxes, depreciation and amort