How much deferred consideration did The Standardx have to pay as part of the Bahia Principe Transaction?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
Bahia Principe—During the year ended December 31, 2024, we completed the Bahia Principe Transaction (see Note 4) for €419 million of base consideration, including €60 million of deferred consideration payable at future dates. The consideration was subject to customary adjustments related to working capital, cash, and indebtedness, and we may pay additional variable contingent consideration through 2034 primarily related to the achievement of certain milestones for the development of additional hotels to be managed by the joint venture. The contingent consideration is payable at each hotel opening and is based on a multiple of stabilized base and incentive management fee revenues, and therefore, we are unable to reasonably estimate our maximum potential future consideration.
We closed on the transaction on December 27, 2024, paid cash of €359 million (approximately $374 million), and accounted for the transaction as a business combination as we are the primary beneficiary of the VIE (see Note 4). Upon acquisition, we recorded a $58 million deferred consideration liability at fair value, of which $20 million was recorded in accrued expenses and other current liabilities and $38 million was recorded in other long-term liabilities on our condensed consolidated balance sheet. The fair value was estimated using a discounted future cash flow model and includes assumptions and judgments regarding the discount rate, which is primarily a Level Three assumption. We also recorded a $33 million contingent consideration liability at fair value in other long-term liabilities on our condensed consolidated balance sheet. The fair value was estimated using a discounted future cash flow model and includes assumptions and judgments regarding the discount rate, estimated probability of achieving the hotel development milestones, and expected amount and timing of payments, which are primarily Level Three assumptions. Total purchase consideration wa
Source: Item 1 — Financial Statements. (FDD pages 156–187)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the Bahia Principe Transaction involved a base consideration of €419 million, which included €60 million of deferred consideration payable at future dates. Additionally, The Standardx may have to pay additional variable contingent consideration through 2034, contingent on the achievement of certain milestones for the development of additional hotels managed by the joint venture.
Upon closing the transaction on December 27, 2024, The Standardx paid cash of €359 million (approximately $374 million). The company recorded a $58 million deferred consideration liability at fair value, with $20 million recorded in accrued expenses and other current liabilities, and $38 million in other long-term liabilities. The fair value was estimated using a discounted future cash flow model, incorporating assumptions and judgments regarding the discount rate.
Furthermore, The Standardx recorded a $33 million contingent consideration liability at fair value in other long-term liabilities. This fair value was also estimated using a discounted future cash flow model, considering factors such as the discount rate, the estimated probability of achieving hotel development milestones, and the expected amount and timing of payments. The document indicates that the maximum potential future consideration related to the Bahia Principe Transaction cannot be reasonably estimated.