Acquisitions and Dispositions of Businesses |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisitions and Dispositions of Businesses | Acquisitions and Dispositions of Businesses On December 1, 2014, the Company acquired 100% of the capital stock of GAB Robins, a U.K. based international loss adjusting and claims management provider, for cash consideration of $71,812,000. During 2015, the Company paid an additional $2,182,000 related to net debt and net working capital adjustments under the terms of the acquisition agreement which increased the purchase price to $73,994,000. Because the financial results of certain of the Company's international subsidiaries, including those in the U.K. through which GAB Robins reports, are included in the Company's consolidated financial statements on a two-month delayed basis, the results of operations of GAB Robins, and the preliminary application of acquisition accounting to the assets acquired, and liabilities and noncontrolling interests assumed, in that acquisition have first been reflected in the Company's audited consolidated financial statements as of and for the period ended December 31, 2015. As a result, comparability to prior periods' results and financial condition may be limited. The purchase was accounted for under the guidance of ASC 805-10, "Business Combinations," as a business combination under the acquisition method. As a requirement of accounting under the acquisition method, all identifiable assets acquired and liabilities assumed and noncontrolling interests were recognized using fair value measurements. Based upon the timing of the acquisition, the allocation of the purchase price is preliminary and subject to change, as the Company gathers additional information related to, among other things, intangible assets, deferred taxes, noncontrolling interests, and uncertain tax positions. During the measurement period since the acquisition, adjustments have been made to the preliminary acquisition accounting for receivables, prepaid and other current assets acquired, other current liabilities assumed, and a payment for adjustments to net debt and net working capital based on additional information gathered. During the three months ended December 31, 2015, the preliminary estimated useful life of customer relationships was reduced from 18 years to 14 years based upon further review of the estimated cash flows used to value the customer relationships as of the acquisition date. There was no change in the value assigned to the customer relationships as of the acquisition date as a result of this review. The purchase price included $6,329,000 placed in escrow for up to two years related to certain acquired contingencies per the terms of the acquisition agreement. As of December 31, 2015, $1,600,000 of the escrowed amount has been released. The acquisition was funded primarily through borrowings in the U.K. under the Company's credit facility. The following table summarizes the preliminary purchase price allocation to the tangible and intangible assets acquired and liabilities assumed and noncontrolling interests in the GAB Robins acquisition included in the Company's consolidated financial statements on the two-month delayed basis as discussed above:
Intangible assets acquired include customer relationships, trademarks, internally developed software and non-compete agreements. The intangibles acquired are made up largely of customer relationships of $38,210,000 being amortized over an estimated life of 14 years, and the remaining assets listed above are being amortized over periods ranging from two to five years. For the year ended December 31, 2015, the Company recognized amortization expense of $3,394,000 in its consolidated financial statements related to these intangibles. Goodwill is attributable to the synergies of the work force in place and business resources as a result of the combination of the companies. The Company does not expect that goodwill attributable to the acquisition will be deductible for tax purposes. For the year ended December 31, 2015, GAB Robins accounted for $79,750,000 of the Company's consolidated revenues before reimbursements. The results of GAB Robins are reported in the International segment. For the year ended December 31, 2015, GAB Robins contribution to the Company's earnings and earnings per share were not material and as such, no pro forma financial information is required to be presented. On July 15, 2014, the Company acquired 100% of the capital stock of Buckley Scott Holdings Limited ("Buckley Scott"), a U.K.-based international construction and engineering adjusting firm, for $3,812,000. Net assets purchased totaled $1,532,000, including $488,000 cash acquired. A deferred income tax liability of $473,000 was recognized on the acquired intangible assets. The agreement contains an earnout provision based on Buckley Scott achieving certain financial results during the two-year period following the completion of the acquisition, with a current estimated fair value of $1,921,000. The difference between the purchase price and the allocation of that price to the net assets acquired represents customer relationship intangibles of $2,195,000 with an estimated 15-year useful life, trade name intangibles of $169,000 with an estimated two-year useful life, and $1,542,000 of goodwill with an indefinite life, representing the estimated value of the assembled workforce and expected synergies with existing businesses. The acquisition enables the Company to significantly expand its construction and engineering business internationally. The results of Buckley Scott have been included in the International segment since the acquisition date and were not material to the operations of the Company. In March 2013, the Company acquired 51% of the capital stock of LWI, a specialist loss consulting company based in London which offers onshore and offshore energy expertise. This acquisition increases Crawford's ability to handle offshore claims and reiterates the Company's focus on offering market leading expertise in specialist and technical services. Crawford has leveraged this acquisition to further grow its market share in the Oil and Energy sector, expanding LWI's capabilities in this highly complex market. The Company has the right to purchase the 49% noncontrolling interest of LWI for a period of six months beginning in June 2018 for a price to be determined using a seven times multiple of LWI's average earnings before interest, taxes, depreciation and amortization for the 36 months preceding the date the right is exercised. The Company also has the right of first refusal within 30 days to match any offer to acquire the 49% noncontrolling interest. The Company sold its 74.9% ownership interest in Crawford South Africa in February 2014 to the noncontrolling interest holder at net book value. Net assets sold were $2,542,000, including cash of $1,554,000. The Company recognized a loss on the disposal of this entity of $474,000 in 2013. The results of Crawford South Africa were not material to the Company. |
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