Accel Entertainment, Inc.ACEL
Accel Entertainment, Inc. Goodwill & Intangibles Disclosure
Goodwill and Other Intangible Assets
The Company had goodwill of $116.3 million as of December 31, 2024, of which $39.1 million is deductible for tax purposes.
The following are the Company’s acquisitions for the years ended December 31, 2024 and 2023, that resulted in the recording of goodwill. See Note 10, Business and Asset Acquisitions, for more information on how the amount of goodwill for the respective acquisitions was calculated.
On December 2, 2024, the Company acquired Fairmount Holdings, Inc. (“Fairmount”), a racing track in Collinsville, Illinois, for a total stock consideration of $40.5 million, of which $12.0 million was recorded as goodwill.
On On November 1, 2024, the Company completed its acquisition of Toucan Gaming, a distributed gaming operator in the state of Louisiana, for total cash consideration of $41.6 million, of which $2.1 million was recorded as goodwill.
On September 19, 2024, the Company completed its acquisition of Lucky 7’s Beverages, LLC (“Lucky 7s”), a hospitality location in Billings, Montana, for a total purchase price of $0.8 million, of which $0.1 million was recorded as goodwill.
On September 19, 2024, the Company completed its acquisition of 24th Street Station Casino (“24th Street Station”), a hospitality location in Billings, Montana, for a total purchase price of $0.8 million, of which $0.1 million was recorded as goodwill.
On June 26, 2024, the Company acquired BRM Services, Inc. (“Jorgenson’s Lounge”), a hospitality location in Helena, Montana, for a total purchase price of $1.1 million, of which $0.3 million was recorded as goodwill.
On February 13, 2023, the Company acquired Rendezvous Casino and Burger Bar (“Rendezvous”), a hospitality operation in Billings, Montana, for a total purchase price of $2.6 million, of which $0.8 million was recorded as goodwill.
The following is a roll forward of the Company's goodwill (in thousands):
| Goodwill balance as of January 1, 2023 | $ | 100,707 | |||
| Addition to goodwill for acquisition of Rendezvous | 847 | ||||
| Goodwill balance as of December 31, 2023 | $ | 101,554 | |||
| Addition to goodwill for acquisition of Jorgenson's Lounge | 306 | ||||
| Addition to goodwill for acquisition of Lucky 7s | 145 | ||||
| Addition to goodwill for acquisition of 24th Street Station | 146 | ||||
| Addition to goodwill for acquisition of Toucan Gaming | 2,130 | ||||
| Addition to goodwill for acquisition of Fairmount | 11,971 | ||||
| Goodwill balance as of December 31, 2024 | $ | 116,252 | |||
The Company conducted its annual goodwill impairment test on October 1, 2024. The Company conducted a qualitative assessment to determine whether it is more likely than not that the goodwill was impaired. Under the qualitative assessment, the Company considered both positive and negative factors, including macroeconomic conditions, industry events, and financial performance, to make a determination of whether it is more likely than not that the fair value of the goodwill is less than its carrying amount. In performing this assessment, the Company considered such factors as its historical performance, its growth opportunities in existing markets; new markets and new products in determining whether the goodwill was impaired. The Company also referenced its forecasts of revenue, operating income, and capital expenditures and concluded it is more likely than not, that the carrying value of its goodwill was not impaired as of October 1, 2024.
Other intangible assets
Other intangible assets, net consist of definite-lived trade names, customer relationships, software applications and indefinite-lived operating licenses. The Company determines the fair value of trade name assets acquired in acquisitions using a relief from royalty valuation method which requires assumptions such as projected revenue and a royalty rate. Customer relationships, software applications and trade names are amortized over their estimated 7 to 20-year useful lives. Operating licenses were assigned an indefinite useful life based on the Company's expected use of the licenses and determined that no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of the these operating licenses.
Other intangible assets, net consist of the following as of December 31 (in thousands):
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||
Amortization Period | Gross Carrying Amount | Accumulated Amortization (1) | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||||
| Customer Relationships | 7 years | $ | 6,800 | $ | (3,325) | $ | 3,475 | $ | 6,800 | $ | (1,538) | $ | 5,262 | ||||||||||||||||||||||||||||
| Software Applications | 8 years | 7,800 | (2,519) | 5,281 | 7,800 | (1,544) | 6,256 | ||||||||||||||||||||||||||||||||||
| Trade Names | 20 years | 11,700 | (1,265) | 10,435 | 9,800 | (776) | 9,024 | ||||||||||||||||||||||||||||||||||
Operating licenses | Indefinite | 34,749 | N/A | 34,749 | 2,810 | N/A | 2,810 | ||||||||||||||||||||||||||||||||||
| $ | 61,049 | $ | (7,109) | $ | 53,940 | $ | 27,210 | $ | (3,858) | $ | 23,352 | ||||||||||||||||||||||||||||||
(1)Included in accumulated amortization is an impairment change of $0.8 million on the customer relationships intangible related to the surrender of the Company’s manufacturing license in Louisiana on October 31, 2024 due to the acquisition of Toucan Gaming. The impairment charge is recorded within Other expenses, net on consolidated statement of operations and comprehensive income.
Amortization expense of other intangible assets, net was $2.4 million, $2.4 million and $1.4 million for the years ended December 31, 2024, 2023 and 2022 respectively. The Company’s estimated annual amortization expense relating to other intangible assets over the next five years is $2.4 million.
Indefinite-lived intangibles are tested for impairment annually or when triggering events occur. There were no indicators of impairment of indefinite-lived intangibles as of December 31, 2024.
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.