What was the estimated earnout provision included in the purchase price of Bumble-LA by Bumble Roofing, and on what was it based?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
| Cash | $ 33,145 |
|---|---|
| Royalties and accounts receivable, net | 1,401,921 |
| Inventory | 1,220,640 |
| Prepaid expenses and other | 966,809 |
| Property and equipment, net | 631,169 |
| Intangibles | 93,505,648 |
| Accounts payable and accrued expenses | (152,960) |
| Contract liability - deferred revenue on franchise sales | (1,394,476) |
| Due to affiliates | (3,008,785) $ 93,203,111 |
Bumble-LA
On May 1, 2023, the Company acquired the assets Bumble-LA for the purpose of adding a roofing contractor brand to the existing portfolio. After net working capital adjustments, the purchase price of Bumble-LA was approximately $3,800,000 which includes an earnout provision of approximately $2,268,000, an estimate based on a percentage of the new formed franchisor's, Bumble, future franchise and royalties revenues. The acquisition was funded by capital contributions from Empower consisting of units of ownership interest in Bobcat Holdings valued at approximately $200,000 and cash. During 2024, additional consideration of $1,396,250 was paid to the former owner, which was comprised of $975,000 of ownership interest in Bobcat Holdings and $441,250 in cash. This payment was made within the mea
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2025 FDD)
According to the 2025 Bumble Roofing Franchise Disclosure Document, when Bumble Roofing acquired Bumble-LA on May 1, 2023, the purchase price included an earnout provision. After net working capital adjustments, the total purchase price for Bumble-LA was approximately $3,800,000. This amount included an earnout provision of approximately $2,268,000.
The earnout provision was an estimate based on a percentage of Bumble Roofing's future franchise and royalties revenues. In 2024, Bumble Roofing paid an additional $1,396,250 to the former owner, comprised of $975,000 of ownership interest in Bobcat Holdings and $441,250 in cash. This additional consideration was paid within the measurement period of the acquisition, leading to the recognition of additional goodwill.
For a prospective Bumble Roofing franchisee, this information provides insight into how the company has grown through acquisitions and how it structures its deals. The earnout provision indicates that a portion of the purchase price was contingent on the future performance of the Bumble Roofing franchise system. The additional consideration paid in 2024 suggests that the franchisor may have exceeded initial expectations, triggering further payments to the previous owner of Bumble-LA.