Annual report pursuant to Section 13 and 15(d)

Business Acquisitions and Related Transactions

v2.4.0.8
Business Acquisitions and Related Transactions
 12 Months Ended
Dec. 31, 2013
Business Combinations [Abstract]  
Business Acquisitions and Related Transactions
BUSINESS ACQUISITIONS AND RELATED TRANSACTIONS
The Company accounts for acquisitions using the acquisition method in accordance with ASC 805, Business Combinations. The purchase price for each has been allocated to the assets based on their estimated fair values at the date of each acquisition as set forth in the table below. The excess purchase price over the estimated fair value of the net assets acquired has been recorded as goodwill. Intangible assets identified have been recorded and are being amortized over periods ranging from one to fourteen years. See Note 4 for additional information. The unaudited pro forma results of operations for the current and prior periods are not presented due to the insignificant impact of the 2013 acquisitions on the Company’s consolidated results of operations.
In June 2013, the Company acquired ESP, comprising two energy management consulting companies and located in Castleford, United Kingdom. The Company paid $8,764,506 to acquire all of the outstanding stock of the ESP companies. The purchase price is subject to post-closing adjustments for working capital and for certain indemnity obligations of the selling stockholders. The Company deposited approximately $777,710 of the initial cash payment with a third-party escrow agent as security for these matters.
In February 2013, the Company acquired substantially all of the assets of Ennovate, an energy service company active throughout Colorado, Nebraska, Kansas, Montana and Wyoming, serving customers that include schools, higher education facilities, municipalities and counties. The Company paid $1,765,556 to acquire these assets. The purchase price is subject to post-closing adjustments for working capital and for certain indemnity obligations of the seller. The Company deposited approximately $1,200,000 of the initial cash payment with a third-party escrow agent as security for these matters.
In July 2012, the Company’s wholly owned subsidiary Ameresco Canada Inc. acquired FAME, a privately held company offering infrastructure asset management solutions serving both public and private sector customers primarily in western Canada. The Company made a cash payment of $4,486,950 to acquire all of the outstanding stock of FAME. The Company deposited approximately $900,000 of the purchase price with a third-party escrow agent as security for the selling stockholders’ indemnification obligations under the terms of the acquisition agreement.
In December 2011, the Company’s wholly owned subsidiary AIS acquired the xChange Point® and energy projects businesses, including automated demand response, from EPS. The Company made an initial cash payment of $4,497,141 to acquire these assets. The purchase price is subject to post-closing adjustments for pro-ration of certain revenue and expense items and for certain indemnity obligations of EPS. The Company deposited approximately $900,000 of the initial cash payment with a third-party escrow agent as security for these matters.
In August 2011, the Company acquired Ameresco Southwest (then known as APS Energy Services, Inc.) from Pinnacle West Capital Corporation. The Company made a cash payment of $50,057,113 to acquire all of the outstanding stock of Ameresco Southwest.
In July 2011, the Company acquired all of the outstanding capital stock of AEG for an initial cash payment of $11,993,236. The Company deposited $1,000,000 of the purchase price with a third-party escrow agent as security for the selling stockholders’ indemnity obligations under the terms of the acquisition agreement. The former stockholders of AEG, all of whom are now employees of the Company, may be entitled to receive up to $5,000,000 in additional consideration if AEG meets certain financial performance milestones. The fair value of the additional consideration was estimated to be $1,652,000, and is included in other liabilities in the purchase allocation table below. As of December 31, 2012 the Company recorded $1,075,112 to accrue for the valuation of the current commitment. As of December 31, 2013 no amount was accrued for the valuation of the current commitment.
In August 2010, the Company acquired Quantum Engineering and Development Inc. (“Quantum”) for an initial cash payment of $6,150,000. During April 2011, the Company made an additional payment of $1,956,366 in accordance with certain provisions of the stock purchase agreement with the former shareholders of Quantum. The payment has been reflected retrospectively as additional goodwill in the accompanying consolidated balance sheets in accordance with ASC 805, Business Combinations.
A summary of the cumulative consideration paid and the allocation of the purchase price of all of the acquisitions in each respective year is as follows:
 
 
2013
 
2012
 
2011
 
 
ESP
 
Ennovate
 
FAME
 
AEG
 
Ameresco Southwest
 
AIS
Cash
 
$
1,291,697

 
$
—

 
$
809,557

 
$
314,642

 
$
—

 
$
—

Accounts receivable
 
360,924

 
411,128

 
320,997

 
4,138,015

 
14,149,703

 
—

Costs and estimated earnings in excess of billings
 
546,608

 
117,468

 
—

 
—

 
11,269,294

 
163,340

Inventory
 
—

 
—

 
—

 
—

 
—

 
47,193

Prepaid expenses and other current assets
 
1,166,565

 
1,710

 
107,715

 
62,345

 
33,329

 
—

Project development costs
 
—

 
—

 
—

 
—

 
—

 
130,044

Property and equipment and project assets
 
75,054

 
62,897

 
43,115

 
7,301

 
6,447,299

 
216,297

Goodwill
 
2,631,562

 
1,050,303

 
1,886,945

 
8,728,169

 
16,545,434

 
1,549,467

Intangible assets(1)
 
4,504,496

 
595,000

 
2,099,990

 
4,904,000

 
7,019,000

 
2,557,000

Other assets
 
—

 
—

 
100

 
52,062

 
—

 
—

Accounts payable
 
(47,625
)
 
(365,060
)
 
(5,713
)
 
(1,610,734
)
 
(1,992,748
)
 
—

Accrued liabilities
 
(606,938
)
 
—

 
(617,731
)
 
(1,011,032
)
 
(3,414,198
)
 
(65,627
)
Billings in excess of cost and estimated earnings
 
—

 
(107,890
)
 
(158,025
)
 
—

 
—

 
(100,573
)
Deferred taxes and other liabilities
 
(1,157,837
)
 
—

 
—

 
(3,591,532
)
 
—

 
—

Purchase price
 
$
8,764,506

 
$
1,765,556

 
$
4,486,950

 
$
11,993,236

 
$
50,057,113

 
$
4,497,141

Total, net of cash received
 
$
7,472,809

 
$
1,765,556

 
$
3,677,393

 
$
11,678,594

 
$
50,057,113

 
$
4,497,141

Total fair value of consideration
 
$
8,764,506

 
$
1,765,556

 
$
4,486,950

 
$
11,993,236

 
$
50,057,113

 
$
4,497,141


(1) Intangible assets acquired in 2013 consisted of customer contracts, customer relationships and non-compete assets of $5,099,496 and were assigned a weighted average useful life of 5.9 years.
The allocation of the purchase price for the 2013 acquisitions are preliminary, based on management’s current best estimates and subject to revision.
The results of the acquired companies since the dates of the acquisitions have been included in the Company’s operations as presented in the accompanying consolidated statements of income, consolidated statements of comprehensive income (loss) and consolidated statements of cash flows.