What was the fair value of the cash consideration transferred in the acquisition of the Christian Brothers Automotive franchise?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
based on the estimated fair values at the dates of acquisition as follows:
| Consideration for the acquisition is approximately comprised of the following (at fair value): | | |---|---| | Fair value of cash consideration transferred | $4,635,000 | In accordance with ASC 805, Business Combinations, the Company has elected the accounting alternative applicable to private companies in which the acquirer can recognize nonseparable intangible assets into goodwill after those assets have been acquired in a business combination.
The acquisition method of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assets acquired and liabilities assumed.
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, the fair value of cash consideration transferred varies. One excerpt indicates the fair value of cash consideration transferred was approximately $1,720,000. Another excerpt indicates the fair value of cash consideration transferred was approximately $2,204,000. A third excerpt indicates the fair value of cash consideration transferred was approximately $3,100,000. A fourth excerpt indicates the fair value of cash consideration transferred was approximately $4,635,000.
These figures reflect different acquisitions accounted for using the purchase method, where the purchase price is allocated to assets and liabilities based on estimated fair values at the time of acquisition. The document notes that the allocation of consideration is preliminary and subject to adjustments within twelve months after the acquisition's closing date. These adjustments may occur as the company finalizes the fair values of acquired assets and assumed liabilities.
For a prospective Christian Brothers Automotive franchisee, this information highlights the variability in acquisition costs and the importance of understanding the specific financial details of any potential franchise purchase. The FDD emphasizes that the amounts used in computing the purchase price may differ from those in the purchase agreements due to fair value measurement conventions prescribed by accounting standards. Therefore, it is essential for franchisees to conduct thorough due diligence and seek professional financial advice when considering acquiring a Christian Brothers Automotive franchise.