Fathom OpCo Predecessor Period Acquisitions | Note 4 - Fathom OpCo Predecessor Period Acquisitions 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 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 Predecessor Period 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 statements of comprehensive loss for the 2021 Predecessor Period are as follows: Period From January 1 - March 31, 2021 (Predecessor) Revenue $ 1,175 Net (loss) $ ( 1,271 ) |
Fathom OpCo Predecessor Period Acquisitions | Note 3. Business Combination with Fathom OpCo On December 23, 2021, Altimar II and Fathom OpCo closed a series of transactions (collectively, the "Business Combination") pursuant to the Business Combination Agreement dated as of July 15, 2021, as amended (the "Agreement"), that resulted in the combined Company becoming a publicly-traded company on the New York Stock Exchange ("NYSE") with the Company controlling Fathom OpCo in an "UP-C" structure. At the closing on December 23, 2021 ("Closing Date"), Altimar II domesticated into a Delaware corporation, and the Company, Fathom Digital Manufacturing Corporation ("Fathom", the "Company", "we", or "our") , was formed. Following the closing, the public investors, the investors that purchased Class A common stock in the private placement offering ("PIPE Investors") and the Founders collectively held Class A common stock representing approximately 10.4 % economic interest in Fathom OpCo, and the CORE Investors and the other Legacy Fathom Owners collectively held 89.6 % of economic interest in Fathom OpCo in the form of Class A common stock. Additionally, the Company issued to the legacy Fathom owners shares of Class B common stock, which have no economic rights but entitle each holder to voting power ( one vote per share). Subsequently to the closing, the Company controls Fathom OpCo and is a holding company with no assets or operations other than its equity interest in Fathom OpCo. The Business Combination was accounted for using the acquisition method with the Company as the accounting acquirer. Under the acquisition method of accounting, the Company's assets and liabilities were recorded at carrying value, and the assets and liabilities associated with Fathom OpCo were recorded at estimated fair value as of the closing date. The excess of the purchase price over the estimated fair values of the net assets acquired was recognized as goodwill. For accounting purposes, the acquirer is the entity that has obtained control of another entity and, thus, consummated a business combination. The determination of whether control has been obtained begins with the evaluation of whether control should be evaluated based on the variable interest or the voting interest model. If the acquiree is a variable interest entity, the primary beneficiary would be the accounting acquirer. Fathom OpCo met the definition of a variable interest entity, and the Company was determined to the be the primary beneficiary and is therefore also the accounting acquirer in the Business Combination. As a result of the Business Combination, the Company's financial statement presentation distinguishes Fathom OpCo as the "Predecessor" ("2021 Predecessor Period" or "Predecessor Period") through the Closing Date. The Company is the "Successor" ("2022 Successor Period" or "Successor Period") for periods after the Closing Date. As a result of the application of the acquisition method of accounting in the Successor Period, the unaudited consolidated financial statements for the Successor Period are presented on a full step-up basis, and are therefore not comparable to the unaudited consolidated financial statements of the Predecessor Period that are not presented on the same full step-up basis. In connection with the Business Combination, the Company incurred $ 19,010 of transaction expenses. These costs were recorded on the income statement of Altimar II prior to the Business Combination. Since the Predecessor period for purposes of these financial statements was deemed to be the historical results of Fathom OpCo, these transaction costs are not presented in either the Company's consolidated statement of comprehensive income (loss) for the 2021 Predecessor Period. However, these transaction costs are reflected in the accumulated deficit balance of the Company in the consolidated balance sheet as of December 31, 2021 (Successor). The seller earnout contingent consideration below represents the estimated fair market value of the 9,000,000 Fathom Earnout Shares issued in conjunction with the Business Combination. The Fathom Earnout Shares will be settled with shares of Class A common stock or New Fathom Units and are accounted for as liability classified contingent consideration. The Fathom Earnout Shares vest in three equal tranches of 3,000,000 shares each at the volume-weighted average share price thresholds of $ 12.50 , $ 15.00 and $ 20.00 , respectively. The earnout period related to the Fathom Earnout Shares is five years from the date of the closing date. These estimated fair values are preliminary and subject to adjustment in subsequent periods. In conjunction with the Business Combination, the Company recognized a deferred tax liability $ 17,573 . The deferred tax liability was recorded on the standalone books of the Company with an offset to goodwill. The deferred tax liability is included in the other noncurrent liabilities caption in the table below. The Business Combination was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred was $ 1,364,220 . See below for a summary of the total consideration transferred. Total Consideration Transferred: Total cash consideration $ 53,332 Fathom earnout shares 88,160 Class A common stock transferred 375,478 Tax Receivable Agreement obligations to the sellers 4,300 Total consideration transferred to sellers 521,270 Non-controlling interest 842,950 Fair value of total consideration transferred $ 1,364,220 The following table sets forth the fair value of the assets and liabilities assumed in connection with the acquisition Total Assets acquired: Cash $ 9,577 Accounts receivable, net 24,712 Inventory 12,825 Prepaid expenses and other current assets 3,172 Property and equipment, net 44,397 Goodwill 1,189,762 Intangible assets 270,000 Other non-current assets 2,200 Total assets acquired 1,556,645 Liabilities assumed: Accounts payable 9,808 Accrued expenses 4,860 Other current liabilities 5,226 Current portion of debt 152,000 Other noncurrent liabilities 20,531 Total liabilities assumed 192,425 Net identifiable assets acquired $ 1,364,220 The purchase price allocation is preliminary and subject to change during the measurement period, which is not to exceed one year from the acquisition date. At this time, the Company does not expect material changes to the assets acquired or liabilities assumed. Goodwill represents future economic benefits arising from acquiring Fathom OpCo's equity, primarily due to its strong market position and its assembled workforce that are not individually and separately recognized as intangible assets. A portion of the Goodwill is deductible for tax purposes. Goodwill is allocated to the Company's sole reportable segment and reporting unit. Identifiable Intangible Assets Provisional fair value Provisional useful life (in years) Trade name $ 70,000 15 Customer relationships 180,000 19 Developed software 4,300 5 Developed technology 15,700 5 $ 270,000 The weighted average amortization period for the amortizable intangibles assets is 16.9 years. |