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What was the estimated fair value of goodwill acquired by 1 800 Packouts from Packouts?

Q: What was the estimated fair value of goodwill acquired by 1 800 Packouts from Packouts?

chase agreement included payment of rollover interest of \$2,000,000 wherein the former owner was granted an ownership interest in the Company, which was included in the total consideration paid for the acquisition. In relation to these acquisitions, the Company elected to early adopt Accounting Standards Update 2021-08, Business Combinations (ASU 2021-08). ASU 2021-08 allows a Company to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. Accordingly, the contract assets and contrac Source: Item 23 — RECEIPT (FDD pages 67–238)

1_800_Packouts Franchise · 2025 FDD

Answer from 2025 FDD Document

chase agreement included payment of rollover interest of $2,000,000 wherein the former owner was granted an ownership interest in the Company, which was included in the total consideration paid for the acquisition.

In relation to these acquisitions, the Company elected to early adopt Accounting Standards Update 2021-08, Business Combinations (ASU 2021-08). ASU 2021-08 allows a Company to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. Accordingly, the contract assets and contrac

Source: Item 23 — RECEIPT (FDD pages 67–238)

What This Means (2025 FDD)

According to 1 800 Packouts' 2025 Franchise Disclosure Document, when the company acquired 100% of the equity interests in 1-800-Packouts, LLC (Packouts) on January 31, 2022, the estimated fair value of goodwill acquired was $18,214,963. This figure represents the excess of the purchase price over the fair values of the assets acquired and liabilities assumed in the transaction.

The securities purchase agreement included a rollover interest payment of $4,230,000, where the former owner received an ownership interest in the company, which was included in the total consideration. Additionally, there were two delayed cash payments of $1,000,000 each, scheduled for June and December 2023. The present value of these payments was valued at $1,795,418 as of the acquisition date and was accrued in the 2022 financials.

Goodwill, along with other intangible assets like trade names and franchise agreements, are subject to amortization. The estimated useful life of goodwill is 10 years. This means that 1 800 Packouts will recognize the expense of goodwill over this period. A prospective franchisee should note that the value of goodwill can be influenced by factors such as the company's ability to grow with additional capital and strategic expertise from the new ownership.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.

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