What was the total purchase price paid by 1 800 Packouts for Packouts?
1_800_Packouts Franchise · 2025 FDDAnswer 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 the 2025 FDD, 1 800 Packouts acquired 100% of the equity interests in 1-800-Packouts, LLC (Packouts) on January 31, 2022. The total purchase price for Packouts was $24,558,417. This price includes various assets such as cash, accounts receivable, trade name, franchise agreements, and goodwill, as well as liabilities assumed by 1 800 Packouts.
The purchase agreement involved a rollover interest payment of $4,230,000, where the former owner received an ownership interest in 1 800 Packouts. Additionally, there were two delayed cash payments of $1,000,000 each, scheduled for June 2023 and December 2023. The present value of these payments as of the acquisition date was $1,795,418, which was accrued and included in the 2022 financial statements.
In 2024, 1 800 Packouts entered into a settlement agreement related to claims under the indemnity clause of the purchase agreement. The company received a $10,000,000 settlement due to alleged breaches of franchise-related representations and warranties by the former owner. As part of the settlement, 1 800 Packouts repurchased the former owner's membership interest for $4,230,000, reducing the legal settlement receivable. The remaining settlement amount was to be received through periodic cash payments, with $4,950,000 received in 2024 and $820,000 due in September 2025. This settlement amount was treated as a reduction in the purchase price and the acquired assets.