What was the total value allocated to acquired customers as an intangible asset during the Best Western acquisition of WorldHotels?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
es of WorldHotels Aktiengesellschaft ("WH")), and assumed certain rights and obligations of ALHI. During 2020, the Company acquired the remaining approximately 2% ownership of the outstanding shares of WH and now owns 100% of the outstanding shares. The WorldHotels Acquisition was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations.
November 30, 2024
The total purchase price was allocated based upon: (i) the amounts reported in the WH historical financial statements for any assets that were reported at fair value in accordance with WH's historical accounting policies, and (ii) ma
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, during the WorldHotels acquisition, Best Western allocated $2.1 million to acquired customers as an intangible asset. This valuation was determined with the assistance of third-party specialists, reflecting management's estimated fair value of these assets. The remaining amount of the purchase price, after deducting the fair value of net assets, was assigned to goodwill.
This allocation is a standard accounting practice in business acquisitions, where the purchase price is distributed among the tangible and intangible assets acquired. Intangible assets like acquired customers represent the value of existing customer relationships that Best Western gained through the acquisition. The valuation of these assets is crucial for determining the overall financial impact of the acquisition and for future amortization calculations.
For a prospective Best Western franchisee, this information provides insight into how the company values its acquisitions and manages its intangible assets. Understanding these financial practices can help franchisees assess the financial stability and strategic direction of Best Western. Additionally, the disclosure of using third-party specialists for valuation suggests a commitment to accurate and reliable financial reporting.