Quarterly report pursuant to Section 13 or 15(d)

Fathom OpCo Predecessor Period Acquisitions

v3.22.2.2
Fathom OpCo Predecessor Period Acquisitions
6 Months Ended
Jun. 30, 2022
Business Combinations [Abstract]  
Fathom OpCo Predecessor Period Acquisitions

Note 4 - Fathom OpCo Predecessor Period Acquisitions

 

Acquisition of Summit Tooling, Inc., and Summit Plastics, LLC:

 

Fathom OpCo completed an acquisition of Summit Tooling, Inc. ("Summit Tooling") and Summit Plastics, LLC (“Summit Plastics”), together with Summit Tooling, (“Summit”) on February 1, 2021 in which it acquired 100 percent of the equity interests of Summit. In conjunction with the equity purchase, Fathom OpCo acquired the real estate in which Summit performs their operations. Summit Tooling designs and manufactures plastic injection molds and Summit Plastics provides molding of precision plastic components for a variety of industries. The primary reason for the acquisition was to

expand Fathom OpCo's capabilities in manufacturing and expand its customer base of high-quality manufacturing and industrial technology companies in North America.

 

The transaction was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") 805 - Business Combinations and the fair value of the total purchase consideration transferred consisted of the following:

 

Consideration Transferred:

 

Total

 

Cash

 

$

10,875

 

Fair value of total consideration transferred

 

$

10,875

 

 

The consideration excluded $892 of buyer transaction expenses that are included in other expenses within the 2021 consolidated statement of comprehensive loss. In addition, Fathom OpCo paid a transaction fee of $225 to an affiliate of the majority member of Fathom OpCo.

 

The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired business into Fathom OpCo's existing platform. The goodwill recognized is partially deductible for tax purposes.

 

The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Summit:

 

Recognized amounts of identifiable assets acquired and liabilities assumed

 

Total

 

Cash

 

$

40

 

Accounts receivable, net

 

 

627

 

Inventory

 

 

339

 

Property and equipment, net

 

 

4,371

 

Intangible assets

 

 

5,000

 

Total assets acquired

 

 

10,377

 

Accounts payable

 

 

40

 

Deferred revenue

 

 

776

 

Other current liabilities

 

 

1,418

 

Total liabilities assumed

 

 

2,234

 

Total identifiable net assets

 

 

8,143

 

Goodwill

 

$

2,732

 

 

Below is a summary of the intangible assets acquired in the acquisition:

 

 

 

Acquisition Date Fair Value

 

 

Estimated Life (Years)

Trade name

 

$

400

 

 

5

Customer relationships

 

 

4,600

 

 

11

 

 

$

5,000

 

 

 

 

The amounts of revenue and net loss of Summit since the acquisition date included in the consolidated statement of comprehensive loss for the 2021 Predecessor Period are as follows:

 

 

 

Period From January 1 - June 30, 2021 (Predecessor)

 

Revenue

 

$

2,753

 

Net loss

 

$

(1,367

)

 

Acquisition of Precision Process Corp.:

Fathom OpCo completed an acquisition of Precision Process Corp. ("PPC") on April 30, 2021 in which it acquired 100 percent of the membership interest of PPC. In conjunction with the equity purchase, Fathom Opco acquired the real estate in which PPC performs their operations. PPC is a manufacturing company that offers integrated engineering-to-production services, specializing in making prototype, small-run and mass production of parts and components for medical, high-tech, automotive and metal stamping industries. The primary reason for the acquisition was to expand Fathom OpCo's capabilities into metal stamping with high-quality manufacturing and industrial technology companies in North America.

 

The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following:

 

Consideration Transferred:

 

Total

 

Cash

 

$

25,721

 

Fair value of total consideration transferred

 

$

25,721

 

 

The consideration excludes $984 of buyer transaction expenses that are included in other expenses within the 2021 consolidated statement of comprehensive loss. Fathom OpCo paid a transaction fee of $264 to an affiliate of the majority member of Fathom OpCo.

 

The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired business into Fathom OpCo's existing platform. The goodwill recognized is partially deductible for tax purposes.

 

The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of PPC:

 

Recognized amounts of identifiable assets acquired and liabilities assumed

 

Total

 

Cash

 

$

162

 

Accounts receivable, net

 

 

899

 

Inventory

 

 

480

 

Fixed assets, net

 

 

2,413

 

Intangible assets

 

 

14,200

 

Total assets acquired

 

 

18,154

 

Accounts payable

 

 

148

 

Accrued expenses

 

 

79

 

Total liabilities assumed

 

 

227

 

Total identifiable net assets

 

 

17,927

 

Goodwill

 

$

7,794

 

 

Below is a summary of the intangible assets acquired in the acquisition:

 

 

 

Acquisition Date Fair Value

 

 

Estimated Life (Years)

Trade name

 

$

1,100

 

 

5

Customer relationships

 

 

13,100

 

 

17

Total intangible assets

 

$

14,200

 

 

 

 

The amounts of revenue and net loss of PPC since the acquisition date included in the consolidated statement of comprehensive loss for the 2021 Predecessor Period is as follows:

 

 

 

Period From January 1 - June 30, 2021 (Predecessor)

 

Revenue

 

$

1,837

 

Net loss

 

$

(635

)

 

Acquisition of Centex Machine and Welding, Inc. and Laser Manufacturing, Inc.:

 

Fathom OpCo completed acquisitions of Centex Machine and Welding, Inc. ("Centex") and Laser Manufacturing, Inc. ("Laser") on April 30, 2021 in which it acquired 100 percent of the equity interests of Centex and Laser. Centex is a top tier medical device manufacturing supplier and Laser provides high precision manufacturing services, combining state of the art technology with expert craftsmanship to deliver superior products. The acquisition was completed in order to expand Fathom OpCo's high-quality manufacturing and industrial technology capabilities in North America.

 

The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following:

 

Consideration Transferred:

 

Centex

 

 

Laser

 

 

Total

 

Cash

 

$

11,774

 

 

$

6,946

 

 

$

18,720

 

Fair value of total consideration transferred

 

$

11,774

 

 

$

6,946

 

 

$

18,720

 

 

The consideration excluded $1,226 of buyer transaction expenses that are included in other expenses within the 2021 consolidated statement of comprehensive loss. Fathom OpCo also paid a transaction fee of $190 to an affiliate of the majority member of the Fathom OpCo in connection with the transaction.

 

The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired businesses into the Company’s existing platform. The goodwill recognized is partially deductible for tax purposes.

 

The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Centex and Laser:

 

 

 

Acquisition Date Fair Value

 

 

 

Centex

 

 

Laser

 

Recognized amounts of identifiable assets acquired and liabilities assumed

 

 

 

 

 

 

Cash

 

$

-

 

 

$

68

 

Accounts receivable, net

 

 

1,775

 

 

 

900

 

Inventory

 

 

524

 

 

 

622

 

Prepaid expenses

 

 

108

 

 

 

1

 

Fixed assets, net

 

 

1,787

 

 

 

760

 

Intangible assets

 

 

6,243

 

 

 

3,557

 

Other assets

 

 

1

 

 

 

2

 

Total assets acquired

 

 

10,438

 

 

 

5,910

 

Accounts payable

 

 

252

 

 

 

568

 

Paycheck Protection Program (PPP) loan

 

 

649

 

 

 

-

 

Accrued expenses

 

 

271

 

 

 

27

 

Other current liabilities

 

 

23

 

 

 

44

 

Other noncurrent liabilities

 

 

1,234

 

 

 

703

 

Total liabilities assumed

 

 

2,429

 

 

 

1,342

 

Total identifiable net assets

 

 

8,009

 

 

 

4,568

 

Goodwill

 

$

3,765

 

 

$

2,378

 

 

Below is a summary of the intangible assets acquired in the acquisition:

 

 

 

Acquisition Date
Fair Value – Centex

 

 

Estimated Life (Years)

Trade name

 

$

510

 

 

5

Customer relationships

 

 

5,733

 

 

17

Total intangible assets

 

$

6,243

 

 

 

 

 

 

Acquisition Date
Fair Value – Laser

 

 

Estimated Life (Years)

Trade name

 

$

290

 

 

5

Customer relationships

 

 

3,267

 

 

17

Total intangible assets

 

$

3,557

 

 

 

 

The combined amounts of revenue and net loss of Centex and Laser since the acquisition date included in the consolidated statement of comprehensive loss for the 2021 Predecessor Period and is as follows:

 

 

 

 

Period From January 1 - June 30, 2021 (Predecessor)

 

Revenue

 

 

$

2,326

 

Net loss

 

 

$

(1,240

)

 

Acquisition of Sureshot Precision, LLC:

 

Fathom OpCo completed an acquisition of Sureshot Precision, LLC (d/b/a as "Micropulse West") on April 30, 2021 in which it acquired 100 percent of the membership interest of Micropulse West. Micropulse West is a full-service specialist offering a variety of services such as wire Electrical Discharge Machine (“EDM”), ram EDM, small hole EDM, computer numerical control ("CNC") and manual machining/turning, surface grinding, and inspection. The acquisition was consistent with the Fathom OpCo’s mission to acquire high-quality manufacturing and industrial technology companies in North America.

 

The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following:

 

Consideration Transferred:

 

Total

 

Cash

 

$

12,452

 

Contingent consideration

 

 

1,295

 

Fair value of total consideration transferred

 

$

13,747

 

 

The consideration excludes $869 of buyer transaction expenses that are included in other expenses within the 2021 consolidated statement of comprehensive loss. In addition, Fathom OpCo paid a transaction fee of $130 to an affiliate of the majority member of Fathom OpCo.

 

The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired businesses into Fathom OpCo's existing platform. The goodwill recognized is partially deductible for tax purposes.

 

The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Micropulse West:

 

Recognized amounts of identifiable assets acquired and liabilities assumed

 

Total

 

Cash

 

$

70

 

Accounts receivable, net

 

 

866

 

Inventory

 

 

333

 

Other current assets

 

 

10

 

Fixed assets, net

 

 

2,490

 

Intangible assets

 

 

7,000

 

Total assets acquired

 

 

10,769

 

Accounts payable

 

 

139

 

Accrued expenses

 

 

13

 

Other current liabilities

 

 

99

 

Total liabilities assumed

 

 

251

 

Total identifiable net assets

 

 

10,518

 

Goodwill

 

$

3,229

 

 

Below is a summary of the intangible assets acquired in the acquisition:

 

 

 

Acquisition Date Fair Value

 

 

Estimated Life (Years)

Trade name

 

$

600

 

 

5

Customer relationships

 

 

6,400

 

 

17

Total intangible assets

 

$

7,000

 

 

 

 

The amounts of revenue and net loss of Micropulse West since the acquisition date included in the 2021 Predecessor Period consolidated statement of comprehensive loss is as follows:

 

 

 

 

Period From January 1 - June 30, 2021 (Predecessor)

 

Revenue

 

 

$

1,134

 

Net loss

 

 

$

(223

)