Contingent consideration payout minimum

[Table of Contents](#ic9c410c95c8848f2bcb73b4a6fbb4634_4)DOVER CORPORATIONNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except share data and where otherwise indicated) (Unaudited)3. Acquisitions  
2022 Acquisitions  
During the nine months ended September 30, 2022, the Company acquired two businesses in separate transactions for total consideration of $229,296, net of cash acquired. Of these transactions, one includes additional consideration contingent on achieving certain financial performance targets. These businesses were acquired to complement and expand upon existing operations within the Pumps & Process Solutions segment. The goodwill recorded as a result of these acquisitions represents the economic benefits expected to be derived from product line expansions and operational synergies. The goodwill is non-deductible for U.S. income tax purposes for these acquisitions.  
Malema  
On July 1, 2022, the Company acquired 99.7% of the equity interests in Malema Engineering Corporation and its related foreign entities ("Malema"), a designer and manufacturer of flow measurement and control instruments serving customers in the biopharmaceutical, semiconductor and industrial sectors, for $220,843, net of cash acquired, subject to contingent consideration. Subsequent to September 30, 2022, the Company acquired the remaining 0.3% of equity interests in Malema. The Malema acquisition expands the Company's biopharma single-use production offering within the Pumps & Process Solutions segment. The contingent consideration is based upon meeting certain financial performance targets for each twelve-month period over the next two years from March 31, 2022, with a range of payouts from $0 to $50,000. No value is attributed to the current estimated fair value of contingent earn-out liability, which will be reassessed quarterly during the performance periods. In connection with this acquisition, the Company recorded goodwill of $151,701 and intangible assets of $64,000 for customer intangibles, $16,000 for patents, and $4,000 for trademarks. The fair value for customer intangibles at the acquisition date was determined using the multi-period excess earnings method under the income approach. The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of intangible assets include discounted future cash flows, customer attrition rates and discount rates. The fair value of assets acquired also includes trade receivables of $2,928. The fair values of the assets acquired and liabilities assumed, and the related tax balances, are based on preliminary estimates and assumptions. These preliminary estimates and assumptions could change significantly during the measurement period as the Company finalizes the valuations of the assets acquired and liabilities assumed, and the related tax balances.  
The following presents the preliminary allocation of purchase price to the assets acquired and liabilities assumed under the Malema acquisition, based on their estimated fair values at acquisition date:

|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
|  |  | Total |
| Current assets, net of cash acquired |  | $ | 8,985  |  |
| Property, plant and equipment |  | 2,733  |  |
| Goodwill |  | 151,701  |  |
| Intangible assets |  | 84,000  |  |
| Other assets and deferred charges |  | 1,159  |  |
| Current liabilities |  | (5,676) |  |
| Non-current liabilities |  | (22,059) |  |
| Net assets acquired |  | $ | 220,843  |  |

  
The amounts assigned to goodwill and major intangible asset classifications were as follows:  


|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Amount allocated |  | Useful life (in years) |
|  |  |  |  |
| Goodwill - non-deductible | $ | 151,701  |  |  | na |
| Customer intangibles | 64,000  |  |  | 15 |
|  |  |  |  |
| Patents | 16,000  |  |  | 10 |
| Trademarks | 4,000  |  |  | 15 |
|  |  |  |  |  |  |
|  | $ | 235,701  |  |  |  |  |  |

  
8
