Acquisitions

6 Months Ended

Jun. 30, 2025

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Acquisitions

Brigit Acquisition

On December 12, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Fortuna Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), Brigit, and Shareholder Representative Services LLC, solely in its capacity as the representative, agent and attorney-in-fact of Brigit’s securityholders, pursuant to which Merger Sub merged with and into Brigit (the “Merger”), with Brigit surviving the Merger as a wholly owned subsidiary of the Company. The Merger with Brigit, a leading holistic financial health technology company, is intended to accelerate Upbound’s strategy to provide technology-driven financial solutions to customers underserved by the traditional financial system. The Merger was completed for total purchase consideration of approximately $395.4 million comprised of stock, cash and other consideration described further below.

In accordance with the Merger Agreement, we issued to the security holders of Brigit (the “Brigit Securityholders”) approximately 2.7 million shares of our common stock, par value $0.01 per share (the “Closing Stock Consideration”), with a value of $29.75 per share based on the volume-weighted average price of our common stock over the ten consecutive trading days ending on (and including) the trading day immediately prior to the Closing Date, and paid to them closing cash consideration of approximately $278.5 million (“Closing Cash Consideration”), excluding approximately $63.7 million in debt settlement payments and other transaction expenses.

We also entered into deferred cash award agreements with certain Brigit employees to replace their unvested Brigit stock options or unvested phantom awards, as applicable, (“Replacement Awards”), each entitling the holder to receive an amount in cash upon vesting equal to the excess of the merger consideration per common shares over the exercise price of the original award. The maximum amount payable pursuant to the Replacement Awards, approximately $7.8 million, included in the Closing Cash Consideration described above, was escrowed on the Closing Date and recorded to Prepaid and other assets in our Condensed Consolidated Balance Sheet. The Replacement Awards are subject to vesting conditions that are substantially similar to those of the original awards. They will be amortized over the remaining award vesting periods as compensation expense and recorded to other gains and charges in our unaudited Condensed Consolidated Statements of Operations.

Pursuant to the terms of the Merger Agreement, we will also pay the Brigit Securityholders $75 million, payable in multiple installments (“Deferred Consideration”), $37.5 million of which will be payable 30 days following the first anniversary of the Closing Date and the remainder of which will be payable no later than 30 days following the second anniversary of the Closing Date. The payment of the Deferred Consideration is subject to acceleration if certain acceleration events specified in the Merger Agreement occur prior to the payment of the Deferred Consideration. The estimated fair value of the Deferred Consideration at the Closing Date was approximately $66.1 million, discounted to estimate the present value of the installment payments that will be made over a 2-year period as described above. The Brigit Securityholders may also receive up to $60 million in earnout payments based on the achievement of certain financial performance metrics for the Brigit business in 2026. The estimated fair value of the earnout payments at the Closing Date was approximately $10.6 million. The fair value of the earnout payments was estimated using a Monte Carlo simulation model based on our estimated long range cash flow projections for the Brigit business.

The portion of Closing Stock Consideration issued to Brigit’s co-founders and certain of their respective affiliates (collectively, the “Co-Founders”) included approximately 1.3 million shares, valued at $39.1 million, which are subject to certain vesting

restrictions over a two-year period from the Closing Date and other limitations set forth in a restricted stock agreement entered into with each such Co-Founder. These shares are being recognized as stock-based compensation expense subject to ASC Topic 718, “Stock-based Compensation”, over the required vesting period, and recorded to other gains and charges in our unaudited Condensed Consolidated Statements of Operations.

Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. The following table provides the estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date:


(in thousands)	January 31, 2025
Aggregate cash consideration(1)	$	277,668
Aggregate stock consideration(2)	41,019
Other consideration(3)	76,691
Total purchase consideration	$	395,378
ASSETS ACQUIRED
Receivables, net(4)	$	44,470
Prepaid expenses and other assets	2,672


Property assets	65,311
Operating lease right-of-use assets	850

Goodwill	196,866
Other intangible assets	152,300
Total assets acquired	$	462,469
LIABILITIES ASSUMED
Accounts payable - trade	17,989
Accrued liabilities	3,877
Operating lease liabilities	850
Deferred income taxes	44,375
Total liabilities assumed	67,091
Net assets acquired	$	395,378

(1) Aggregate cash consideration excludes $7.8 million in Replacement Awards described above and $58.6 million in cash acquired, and includes cash paid to settle Brigit's outstanding debt and loan balances and other transaction expenses of $63.7 million, and post-closing net working capital adjustments of $1.7 million.

(2) Aggregate stock consideration excludes approximately 1.3 million shares valued at approximately $39.1 million subject to certain vesting restrictions, as described further above.

(3) Includes the fair value of Deferred Consideration and earnout payments described above, which were not included in Closing Cash Consideration paid at the time of closing but will be paid out in future periods based on the terms of the Merger Agreement.

(4) Includes gross contractual receivables of $43.8 million related to customer cash advances, of which $4.5 million were estimated to be uncollectible as of the Closing Date.

The carrying values for certain assets and liabilities assumed as part of the acquisition, including receivables, prepaid expenses and other assets, accounts payable and accrued liabilities were considered equivalent to and recorded as fair value, as of the date of acquisition, due to the short term nature of these balances. Operating lease right-of-use assets and liabilities were recorded as the discounted value of future obligations in accordance with ASC Topic 842, “Leases”. The fair value measurements for acquired intangible assets and developed technology were primarily based on significant unobservable inputs (Level 3) developed using company-specific information. Certain fair values were determined based on an independent valuation of the net assets acquired, including $152.3 million of identifiable intangible assets with an estimated weighted average useful life of nine years, as follows:


Asset Class	Estimated Fair Value (in thousands)		Estimated Remaining Useful Life (in years)
Customer contracts	$	144,500	10
Trade name	7,800		7

Developed technology, included in Property assets, net, in line with our accounting policies, was also acquired with a value of $65.1 million and an estimated remaining useful life of seven years. The fair value for these intangible and property assets were estimated using common industry valuation methods for similar asset types, including the relief-from-royalty, excess earnings and replacement cost methods based primarily on the Company's cost inputs and projected cash flows.

In addition, we recorded goodwill of $196.9 million in our Brigit operating segment, which consists of the excess of the net purchase price over the fair value of the net assets acquired. Goodwill represents expected cost and revenue synergies and other benefits expected to result within our financial health business from the acquisition of Brigit.

Brigit’s results of operations are reflected in our unaudited Condensed Consolidated Statements of Operations from the Closing Date.

In the second quarter of 2025, we recorded adjustments to certain assets acquired and liabilities assumed related to post-closing updates in net working capital and adjustments to deferred income taxes resulting in an overall decrease to goodwill of approximately $1.3 million. Although we do not anticipate additional adjustments to the above values, we are still in the process of finalizing our assessments of the purchase price allocation and will record any additional necessary adjustments to acquired assets and liabilities within the allowable measurement period.

In connection with this acquisition, we have incurred approximately $9.8 million in acquisition-related expenses including expenses related to legal, professional, and banking transaction fees, of which $6.1 million was recognized during the six months ended June 30, 2025. These costs were included in other gains and charges in our unaudited Condensed Consolidated Statements of Operations.

The following unaudited pro forma combined results of operations present our financial results as if the acquisition of Brigit had been completed on January 1, 2024. These unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. The unaudited pro forma information reflects step-up and step-down adjustments for depreciation and amortization of $1.8 million and $12.4 million for the fair value of the assets acquired, compensation expense of $(2.2) million and $14.6 million as a result of Closing Stock Consideration and Replacement Awards subject to vesting provisions, interest expense of $1.4 million and $8.6 million due to the elimination of historical debt, accreted interest of $0.3 million and $1.9 million related to the Deferred Consideration, and adjustments to income tax expense (benefit) of $1.2 million and $(13.6) million, for the six months ended June 30, 2025 and 2024, respectively. In addition, pro forma net income for the six months ended June 30, 2025 and 2024 has been adjusted to reflect transaction expenses incurred of $22.0 million as of January 1, 2024. The unaudited pro forma financial information is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Pro Forma total revenues	$	1,157,536	$	1,113,464	$	2,349,953	$	2,243,675
Pro Forma net earnings(1)	5,327		28,153		37,066		25,734

(1) Total pro forma adjustments to net earnings represented decreases of $10.1 million and $3.2 million for the three and six months ended June 30, 2025, respectively and $5.8 million and $35.9 million for the three and six months ended June 30, 2024, respectively.

The amounts of revenue and earnings of Brigit included in our Condensed Consolidated Statements of Operations from the acquisition date of January 31, 2025 are as follows:


(in thousands)	January 31, 2025 - June 30, 2025

Total revenues	$	83,751
Net earnings(1)	10,780

(1)Net earnings for the period includes amortization and depreciation of intangible assets and developed technology acquired upon closing of the Brigit acquisition.

Other Acquisitions

During the six months ended June 30, 2025, we acquired one lease-to-own store location and customer accounts for an aggregate purchase price of approximately $0.2 million. The store location was closed upon acquisition and consolidated into existing store operations in our Rent-A-Center segment.

- Definition

The entire disclosure for business combination.

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+ Details

UPBOUND GROUP, INC. 10-Q