How much goodwill did Management Recruiters recognize in conjunction with the Temporary Alternatives acquisition?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
e of acquisition through December 31, 2022, the fair value of assets acquired were adjusted in conjunction with a third-party valuation and the net working capital reconciliation. These adjustments included a decrea
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, in conjunction with the acquisition of Temporary Alternatives, Management Recruiters recognized approximately $375,000 of goodwill. This acquisition was completed on January 24, 2022, and included three locations in West Texas and New Mexico, for a total of $7.0 million, inclusive of net working capital. Temporary Alternatives was a staffing division of dmDickason Personnel Services.
Goodwill, in this context, represents the expected synergies between Temporary Alternatives and Management Recruiters' existing business. It also accounts for the value of the acquired assembled workforce, potential new customers, and anticipated future cash flows resulting from the acquisition.
Goodwill is an accounting concept that reflects the intangible assets acquired in a business combination that are not separately identifiable. It is often associated with the reputation and brand value of the acquired entity. The FDD notes that the goodwill recognized in this case is deductible for income tax purposes, which could provide a tax benefit to Management Recruiters.