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_____________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
______________________________
(Mark One)
Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2020
or
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to _________
Commission File Number: 001-39095
______________________________
BRP GROUP, INC.
(Exact name of registrant as specified in its charter)
______________________________
Delaware
  https://cdn.kscope.io/74514bd2bb6979f53009a53bf1d85817-brp-20200930_g1.jpg
61-1937225
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
4211 W. Boy Scout Blvd., Suite 800 Tampa, Florida 33607
(Address of principal executive offices) (Zip code)
(866) 279-0698
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01 per shareBRPNasdaq Global Select Market
______________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No  
The number of outstanding shares of the registrant’s Class A common stock, $0.01 par value, as of November 6, 2020 was approximately 33,988,164.



BRP GROUP, INC.
INDEX
Page




Note Regarding Forward-Looking Statements
We have made statements in this report, including matters discussed under Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Part II, Item 1. Legal Proceedings, Part II, Item 1A. Risk Factors and in other sections of this report, that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under Part II, Item 1A. You should specifically consider the numerous risks outlined under Risk Factors in our Annual Report on Form 10-K filed with the SEC on March 24, 2020 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2020 filed with the SEC on May 13, 2020.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations.



Commonly Used Defined Terms
The following terms have the following meanings throughout this Quarterly Report on Form 10-Q unless the context indicates or requires otherwise:
AgencyRM     AgencyRM LLC, a Medicare Partner effective February 1, 2020
Book of Business    Insurance policies bound by us on behalf of our Clients
Clients    Our insureds
Colleagues    Our employees
Exchange Act    Securities Exchange Act of 1934, as amended
Fletcher    Fletcher Financial Group, Inc., a Medicare Partner effective July 31, 2020
Highland    Highland Risk Services, LLC, a Specialty Partner effective January 1, 2020
Insurance Company Partners    Insurance companies with which we have a contractual relationship
IRP    Insurance Risk Partners, LLC, a Middle Market Partner effective April 1, 2020
Lanier    Lanier Upshaw, Inc., a Middle Market Partner effective January 1, 2020
MIA    Medicare Insurance Advisors, Inc., a Medicare Partner effective July 31, 2020
MGA    Managing General Agent
New JPM Credit Agreement    Credit Agreement, dated as of October 14, 2020, between Baldwin Risk Partners, LLC, as borrower, JPMorgan Chase Bank, N.A., as the Administrative Agent, the Guarantors party thereto, the Lenders party thereto and the Issuing Lenders party thereto
Old JPM Credit Agreement    Fourth amended and restated credit agreement between Baldwin Risk Partners, LLC, as borrower, JPMorgan Chase Bank, N.A., as agent and lender, and the several banks and other financial institutions as lenders entered into on December 19, 2019, pursuant to an amendment and restatement agreement between Baldwin Risk Partners, LLC, as borrower, Cadence Bank, N.A., as existing agent and lender, JPMorgan Chase Bank, N.A., as successor agent and lender, and the several banks and other financial institutions as lenders entered into on December 19, 2019, as amended by the Incremental Facility Amendment No. 1 entered into on March 12, 2020, the Amendment No. 2 to Credit Agreement entered into on April 6, 2020 and the Incremental Facility Amendment No. 3 entered into June 18, 2020
Operating Groups    Our reportable segments
Partners    Companies that we have acquired, or in the case of asset acquisitions, the producers
Partnerships    Strategic acquisitions made by the Company
Pendulum    Pendulum, LLC, a Specialty Partner effective May 1, 2020
Pre-IPO LLC Members    Owners of LLC Units of Baldwin Risk Partners, LLC prior to our initial public offering
Risk Advisors    Our producers
Rosenthal    Rosenthal Bros., Inc., a Middle Market Partner effective June 1, 2020
SEC    U.S. Securities and Exchange Commission
Securities Act    Securities Act of 1933, as amended
SPG    Southern Protective Group, LLC, a Middle Market Partner effective May 1, 2020
TBA/RBA    Trinity Benefit Advisors, Inc./Russ Blakely & Associates, LLC, a Middle Market Partner effective June 1, 2020
Tax Receivable Agreement    Tax Receivable Agreement between BRP Group, Inc. and the holders of LLC Units in Baldwin Risk Partners, LLC entered into on October 28, 2019
VibrantUSA    VibrantUSA Inc., a Medicare Partner effective date of February 1, 2020



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRP GROUP, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)September 30, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$50,220 $67,689 
Restricted cash7,778 3,382 
Premiums, commissions and fees receivable, net98,345 58,793 
Prepaid expenses and other current assets2,689 3,019 
Due from related parties41 43 
Total current assets159,073 132,926 
Property and equipment, net7,791 3,322 
Other assets7,949 5,600 
Intangible assets, net203,555 92,450 
Goodwill344,396 164,470 
Total assets$722,764 $398,768 
Liabilities, Mezzanine Equity and Stockholders Equity
Current liabilities:
Premiums payable to insurance companies$83,617 $50,541 
Producer commissions payable12,019 7,470 
Accrued expenses and other current liabilities21,851 12,334 
Current portion of contingent earnout liabilities7,065 2,480 
Total current liabilities124,552 72,825 
Revolving lines of credit101,000 40,363 
Contingent earnout liabilities, less current portion78,323 46,289 
Other liabilities2,194 2,017 
Total liabilities306,069 161,494 
Commitments and contingencies (Note 14)
Mezzanine equity:
Redeemable noncontrolling interest101 23 
Stockholders’ equity:
Class A common stock, par value $0.01 per share, 300,000,000 shares authorized; 33,932,868 and 19,362,984 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively
339 194 
Class B common stock, par value $0.0001 per share, 50,000,000 shares authorized; 45,247,711 and 43,257,738 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively
4 4 
Additional paid-in capital237,644 82,425 
Accumulated deficit(14,038)(8,650)
Notes receivable from stockholders(519)(688)
Total stockholders’ equity attributable to BRP Group, Inc.223,430 73,285 
Noncontrolling interest193,164 163,966 
Total stockholders’ equity416,594 237,251 
Total liabilities, mezzanine equity and stockholders’ equity$722,764 $398,768 

See accompanying Notes to Condensed Consolidated Financial Statements.
5


BRP GROUP, INC.
Condensed Consolidated Balance Sheets (Continued)
(Unaudited)
The following table presents the assets and liabilities of the Company’s consolidated variable interest entities, which are included on the condensed consolidated balance sheets above. The assets in the table below include those assets that can only be used to settle obligations of the consolidated variable interest entities.
(in thousands)September 30, 2020December 31, 2019
Assets of Consolidated Variable Interest Entities That Can Only be Used to Settle the Obligations of Consolidated Variable Interest Entities:
Cash and cash equivalents$122 $47 
Premiums, commissions and fees receivable, net153 75 
Total current assets275 122 
Property and equipment, net23 31 
Other assets5 7 
Total assets$303 $160 
Liabilities of Consolidated Variable Interest Entities for Which Creditors Do Not Have Recourse to the Company:
Premiums payable to insurance companies$1 $6 
Producer commissions payable19 15 
Accrued expenses and other current liabilities7 29 
Total liabilities$27 $50 

































See accompanying Notes to Condensed Consolidated Financial Statements.
6


BRP GROUP, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
(in thousands, except share and per share data)2020201920202019
Revenues:
Commissions and fees
$65,843 $38,383 $171,270 $101,280 
Operating expenses:
Commissions, employee compensation and benefits
48,469 26,788 122,280 67,068 
Other operating expenses
12,146 6,320 30,577 16,711 
Amortization expense
5,185 3,082 13,231 6,793 
Change in fair value of contingent consideration
6,455 535 12,697 (3,222)
Depreciation expense
258 184 663 460 
Total operating expenses
72,513 36,909 179,448 87,810 
Operating income (loss)
(6,670)1,474 (8,178)13,470 
Other expense:
Interest expense, net(922)(3,785)(2,554)(8,998)
Other income (expense)(23)5 (23)5 
Total other expense(945)(3,780)(2,577)(8,993)
Income (loss) before income taxes
(7,615)(2,306)(10,755)4,477 
Income tax provision
  12  
Net income (loss)
(7,615)(2,306)(10,767)4,477 
Less: net income (loss) attributable to noncontrolling interests
(4,347)(2,306)(5,379)4,477 
Net loss attributable to BRP Group, Inc.
$(3,268)$ $(5,388)$ 
Comprehensive income (loss)
$(7,615)$(2,306)$(10,767)$4,477 
Comprehensive income (loss) attributable to noncontrolling interests
(4,347)(2,306)(5,379)4,477 
Comprehensive loss attributable to BRP Group, Inc.
(3,268) (5,388) 
Basic and diluted net loss per share
$(0.10)$(0.22)
Basic and diluted weighted-average shares of Class A common stock outstanding
33,098,35624,371,304











See accompanying Notes to Condensed Consolidated Financial Statements.
7


BRP GROUP, INC.
Condensed Consolidated Statements of Stockholders’/Members’ Equity (Deficit) and Mezzanine Equity
(Unaudited)
For the Three Months Ended September 30, 2020
Stockholders Equity
Mezzanine Equity
Class A Common StockClass B Common Stock
(in thousands, except share data)SharesAmountSharesAmountAPICAccumulated DeficitNotes Receivable from StockholdersNon-controlling InterestTotalRedeemable Non-controlling Interest
Balance at June 30, 202033,302,477$333 45,458,763$4 $235,520 $(10,770)$(573)$198,049 $422,563 $71 
Net income (loss)— — — — — (3,268)— (4,369)(7,637)22 
Offering costs— — — (28)— — — (28)— 
Equity issued in business combinations25,491  — 445 — —  445 — 
Share-based compensation, net of forfeitures393,8484 — — 908 — — 285 1,197 — 
Redemptions and repurchases of common stock211,052 2 (211,052)— 799 — — (801) — 
Repayment of stockholder notes receivable— — — — — — 54 — 54 — 
Contributions— — — — — — — — — 8 
Balance at September 30, 202033,932,868$339 45,247,711$4 $237,644 $(14,038)$(519)$193,164 $416,594 $101 

For the Nine Months Ended September 30, 2020
Stockholders Equity
Mezzanine Equity
Class A Common StockClass B Common Stock
(in thousands, except share data)SharesAmountSharesAmountAPICAccumulated DeficitNotes Receivable from StockholdersNon-controlling InterestTotalRedeemable Non-controlling Interest
Balance at December 31, 201919,362,984$194 43,257,738$4 $82,425 $(8,650)$(688)$163,966 $237,251 $23 
Net income (loss)— — — — — (5,388)— (5,438)(10,826)59 
Issuance of Class A common stock in offering, net of underwriting discounts and offering costs13,225,000132 (2,475,000)— 144,497 — — (9,398)135,231 — 
Equity issued in business combinations513,0255 4,805,572— 8,117 — — 44,453 52,575 — 
Share-based compensation, net of forfeitures580,0456 — — 2,600 — — 880 3,486 — 
Redemptions and repurchases of common stock251,814 2 (340,599)— 5 — — (1,299)(1,292)— 
Repayment of stockholder notes receivable— — — — — — 169 — 169 — 
Contributions— — — — — — — — — 19 
Balance at September 30, 202033,932,868$339 45,247,711$4 $237,644 $(14,038)$(519)$193,164 $416,594 $101 






See accompanying Notes to Condensed Consolidated Financial Statements.
8


BRP GROUP, INC.
Condensed Consolidated Statements of Stockholders’/Members’ Equity (Deficit) and Mezzanine Equity (Continued)
(Unaudited)
For the Three Months Ended September 30, 2019
Members’ Equity (Deficit)Mezzanine Equity
(in thousands)
Members Deficit
Notes Receivable from MembersNoncontrolling InterestTotalRedeemable Noncontrolling InterestRedeemable Members’ Capital
Balance at June 30, 2019$(128,869)$(256)$2,424 $(126,701)$65,906 $110,596 
Net income (loss)(2,578)— (20)(2,598)1,440 (1,148)
Contributions— — — — 1 — 
Repayment of member notes receivable— 16 — 16 — — 
Issuance and vesting of Management Incentive Units303 — — 303 — — 
Issuance of common units— — —  — — 
Equity issued in business combinations— — — — 6,674 — 
Change in the redemption value of redeemable interests(74,166)— — (74,166)11,125 63,041 
Distributions(732)— (17)(749)(2,538)(251)
Balance at September 30, 2019$(206,042)$(240)$2,387 $(203,895)$82,608 $172,238 

For the Nine Months Ended September 30, 2019
Members’ Equity (Deficit)Mezzanine Equity
(in thousands)
Members Deficit
Notes Receivable from MembersNoncontrolling InterestTotalRedeemable Noncontrolling InterestRedeemable Members’ Capital
Balance at December 31, 2018$(63,606)$(90)$937 $(62,759)$46,208 $39,354 
Net income119 — 112 231 3,761 485 
Contributions— — — — 35 — 
Contributions through issuance of member notes receivable— (310)47 (263)263 — 
Repayment of member notes receivable— 160 — 160 — — 
Issuance and vesting of Management Incentive Units663 — — 663 — — 
Issuance of common units612 — 386 998 — 5,509 
Repurchase of common units— — — — — (11,177)
Repurchase redemption value adjustments— — — — — (1,323)
Equity issued in business combinations— — 1,000 1,000 37,637 — 
Change in the redemption value of redeemable interests(140,708)— — (140,708)167 140,541 
Distributions(3,122)— (95)(3,217)(5,463)(1,151)
Balance at September 30, 2019$(206,042)$(240)$2,387 $(203,895)$82,608 $172,238 








See accompanying Notes to Condensed Consolidated Financial Statements.
9


BRP GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended September 30,
(in thousands)20202019
Cash flows from operating activities:
Net income (loss)
$(10,767)$4,477 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
13,894 7,253 
Change in fair value of contingent consideration
12,697 (3,222)
Share-based compensation expense
5,357 110 
Payment of contingent earnout consideration in excess of purchase price accrual(1,727) 
Amortization of deferred financing costs
384 1,117 
Loss on extinguishment of debt
 115 
Issuance and vesting of Management Incentive Units
 663 
Participation unit compensation
 150 
Changes in operating assets and liabilities, net of effect of acquisitions:
Premiums, commissions and fees receivable, net
(12,717)(441)
Prepaid expenses and other current assets
230 (921)
Due from related parties
2 73 
Accounts payable, accrued expenses and other current liabilities
23,418 5,090 
Other liabilities
 105 
Net cash provided by operating activities
30,771 14,569 
Cash flows from investing activities:
Capital expenditures
(4,135)(1,465)
Investment in business venture
 (200)
Cash consideration paid for asset acquisitions, net of cash received
(695)(671)
Cash consideration paid for business combinations, net of cash received
(230,403)(99,486)
Net cash used in investing activities
(235,233)(101,822)
Cash flows from financing activities:
Proceeds from issuance of Class A common stock, net of underwriting discounts
167,346  
Repurchase/redemption of LLC Units and Class B common stock
(32,610) 
Payment of common stock offering costs
(798) 
Payment of contingent and guaranteed earnout consideration
(1,192)(813)
Proceeds from revolving line of credit
185,637 68,464 
Repayments of revolving line of credit
(125,000) 
Proceeds from related party debt
 49,845 
Payments on long-term debt
 (204)
Payments of debt issuance costs and debt extinguishment costs
(2,182)(15)
Proceeds from repayment of stockholder/member notes receivable
169 160 
Repurchase of common units
 (12,500)
Distributions
 (9,831)
Other
19 1,662 
Net cash provided by financing activities
191,389 96,768 
Net increase (decrease) in cash and cash equivalents and restricted cash(13,073)9,515 
Cash and cash equivalents and restricted cash at beginning of period
71,071 7,995 
Cash and cash equivalents and restricted cash at end of period
$57,998 $17,510 
See accompanying Notes to Condensed Consolidated Financial Statements.
10


BRP GROUP, INC.
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the Nine Months Ended September 30,
(in thousands)20202019
Supplemental schedule of cash flow information:
Cash paid during the period for interest$2,309 $7,480 
Disclosure of non-cash investing and financing activities:
Equity issued in business combinations$52,575 $38,637 
Contingent earnout consideration issuances26,612 29,117 
Additions to property and equipment included in accrued expenses and other current liabilities561  
Change in the redemption value of redeemable interests 140,708 
Capitalization of issuance to redeemable common member 5,509 
Capitalization of offering costs 4,207 
Debt issuance costs added to revolving line of credit 2,554 
Transfer of long-term debt to revolving line of credit 1,820 
Contingently returnable consideration for business combinations 321 




































See accompanying Notes to Condensed Consolidated Financial Statements.
11


BRP GROUP, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Business and Basis of Presentation
BRP Group, Inc. (“BRP Group” or the “Company”) was incorporated in the state of Delaware on July 1, 2019. BRP Group was formed for the purpose of completing an initial public offering of its common stock and related transactions in order to carry on the business of Baldwin Risk Partners, LLC (“BRP”) as a publicly-traded entity. On October 28, 2019, BRP Group completed an initial public offering of its Class A common stock (the “Initial Public Offering”) and became the sole managing member of BRP. The consolidated financial statements of BRP Group have been presented as a combination of the financial results of BRP Group and BRP as of the earliest period presented as discussed further under Principles of Consolidation below.
BRP Group is a diversified insurance agency and services organization that markets and sells insurance products and services to its customers throughout the U.S., although a significant portion of the Company’s business is concentrated in the southeastern U.S. BRP Group and its subsidiaries operate through four reportable segments (“Operating Groups”), including Middle Market, Specialty, MainStreet, and Medicare, which are discussed in more detail in Note 15.
Public Offering
On June 29, 2020, the Company completed a public offering of 13,225,000 shares of its Class A common stock, including 1,725,000 shares sold pursuant to the underwriters’ over-allotment option. The shares were sold at an offering price of $13.25 per share for net proceeds of $166.5 million after deducting underwriting discounts and commissions of $7.9 million and offering expenses of $798,000.
Principles of Consolidation
The consolidated financial statements include the accounts of BRP Group and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
As the sole manager of BRP, BRP Group operates and controls all the business and affairs of BRP, and has the sole voting interest in, and controls the management of, BRP. Accordingly, BRP Group began consolidating BRP in its consolidated financial statements as of the closing date of the Initial Public Offering, resulting in a noncontrolling interest related to the LLC Units held by BRP’s LLC members (the “LLC Units”) on its consolidated financial statements.
BRP and BRP Group were under the common control of the Company’s Chairman, Lowry Baldwin, before and immediately after the reorganization transactions undertaken in connection with the Initial Public Offering (the “Reorganization Transactions”). Prior to the Reorganization Transactions, Mr. Baldwin held a controlling interest in Baldwin Investment Group Holdings, LLC (“BIGH”), which was the controlling owner of BRP through its majority ownership of BRP’s common units. In addition, Mr. Baldwin was the sole shareholder of BRP Group. Upon reorganization, BRP Group became the sole managing member of BRP. Holders of the Class B common stock hold a majority of the voting power of BRP Group and stockholders of the then majority of the Class B common stock, including BIGH, executed a Voting Agreement in which they agreed to vote in the same manner as Mr. Baldwin. As a result, Mr. Baldwin continued to control BRP Group subsequent to the Initial Public Offering and Reorganization Transactions. Accordingly, we have accounted for the Reorganization Transactions as a transaction between entities under common control in accordance with Accounting Standards Codification (“ASC”) Topic 805-50, Business Combinations - Related Issues, under which the financial information of BRP Group has been combined with that of BRP as of the earliest period presented.
The Company has prepared these consolidated financial statements in accordance with ASC Topic 810, Consolidation (“Topic 810”). Topic 810 requires that if an enterprise is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity should be included in the consolidated financial statements of the enterprise. The Company has recognized certain entities as variable interest entities of which the Company is the primary beneficiary and has included the accounts of these entities in the consolidated financial statements. Refer to Note 4 for additional information regarding the Company’s variable interest entities.
12


Topic 810 also requires that the equity of a noncontrolling interest shall be reported on the condensed consolidated balance sheets within total equity of the Company. Certain redeemable noncontrolling interests are reported on the condensed consolidated balance sheets as mezzanine equity. Topic 810 also requires revenues, expenses, gains, losses, net income or loss, and other comprehensive income or loss to be reported in the consolidated financial statements at consolidated amounts, which include amounts attributable to the owners of the parent and the noncontrolling interests.
Noncontrolling Interest
Noncontrolling interests are reported at historical cost basis adjusted for cumulative earnings or loss allocations and classified as a component of stockholders’ equity on the condensed consolidated balance sheets. Noncontrolling interest as presented as of September 30, 2020 and December 31, 2019 and for the nine months ended September 30, 2020 and 2019 consists of the noncontrolling interest holdings of BRP Group subsequent to the Company’s reorganization in connection with the Initial Public Offering. The controlling interest holdings of BRP for the period from January 1, 2019 through September 30, 2019 have been reclassified to noncontrolling interest holdings of BRP Group for presentation of activity for the three and nine months ended September 30, 2019.
Unaudited Interim Financial Reporting
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. Accordingly, they do not include all the information and related notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting of recurring accruals, considered necessary for fair statement have been included. The accompanying balance sheet for the year ended December 31, 2019 was derived from audited financial statements, but does not include all disclosures required by GAAP. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2020.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates underlying the accompanying consolidated financial statements include the application of guidance for revenue recognition, including determination of allowances for estimated policy cancellations, business combinations and purchase price allocation, impairment of long-lived assets including goodwill, and valuation of the Tax Receivable Agreement liability and share-based compensation.
Changes in Presentation
Certain prior year amounts have been reclassified to conform to current year presentation.
Recent Accounting Pronouncements
As an emerging growth company, the Jumpstart Our Business Startups (“JOBS”) Act permits the Company an extended transition period for complying with new or revised accounting standards affecting public companies. The Company has elected to use this extended transition period and adopt certain new accounting standards on the private company timeline, which means that the Company’s financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards on a non-delayed basis. The Company has elected the extended transition period for the adoption of the Accounting Standards Updates (“ASUs”) below, except those where early adoption was both permitted and elected.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The guidance in ASU 2016-02 supersedes the lease recognition requirements in Accounting Standards Codification (“ASC”) Topic 840, Leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The FASB has subsequently issued several additional ASUs related to leases, which improved upon, provided interpretation of and transition relief for, the guidance issued in ASU 2016-02 and extended the adoption date for nonpublic business entities. This guidance is effective for the fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the full effect that the adoption of this standard will have on its consolidated financial statements.
13


In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements (“ASU 2016-13”), which amends the guidance for recognizing credit losses on financial instruments measured at amortized cost. ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The FASB has subsequently issued several additional ASUs related to credit losses, which improved upon, provided interpretation of and transition relief for, the guidance issued in ASU 2016-13 and extended the adoption date for nonpublic business entities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the full effect that the adoption of this standard will have on its consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) (“Topic 820”): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This update modifies the disclosure requirements related to fair value measurement by removing certain disclosure requirements related to the fair value hierarchy. This update also modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The Company adopted the guidance in ASU 2018-13 effective January 1, 2020, which impacted the presentation of the fair value measurements disclosure in Note 13 but did not otherwise impact the Company’s consolidated financial statements.
2. Significant Accounting Policies
There have been no material changes in the Company’s significant accounting policies from those that were disclosed for the year ended December 31, 2019 in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2020, except as noted below.
Self-Insurance Reserve
The Company converted to a self-insured health insurance plan beginning in March 2020 for which it carries an insurance program with specific retention levels or high per-claim deductibles for expected losses. The Company records a liability for all unresolved claims and for an estimate of incurred but not reported ("IBNR") claims at the anticipated cost that falls below its specified retention levels or per-claim deductible amounts. In establishing reserves, the Company considers actuarial assumptions and judgments regarding economic conditions and the frequency and severity of claims. The Company had an IBNR reserve of $1.1 million at September 30, 2020, which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents. The Company manages this risk using high creditworthy financial institutions. Interest-bearing accounts and noninterest-bearing accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Deposits exceed amounts insured by the FDIC. The Company has not experienced any losses from its deposits.
3. Business Combinations
The Company completed 11 business combinations for an aggregate purchase price of $317.7 million during the nine months ended September 30, 2020. In accordance with ASC Topic 805, Business Combinations (“Topic 805”), total consideration was first allocated to the fair value of assets acquired, including liabilities assumed, with the excess being recorded as goodwill. For financial statement purposes, goodwill is not amortized but rather is evaluated for impairment at least annually or more frequently if an event or change in circumstances occurs that indicates goodwill may be impaired. Goodwill is deductible for tax purposes and will be amortized over a period of 15 years.
The recorded purchase price for certain of the foregoing business combinations includes an estimation of the fair value of contingent consideration obligations associated with potential earnout provisions, which are generally based on recurring commissions and fees revenue. The contingent earnout consideration amounts identified in the tables below are measured at fair value within Level 3 of the fair value hierarchy as discussed further in Note 13. Any subsequent changes in the fair value of contingent earnout liabilities will be recorded in the condensed consolidated statements of comprehensive income (loss) when incurred.
The recorded purchase price for certain business combinations also includes an estimation of the fair value of noncontrolling interests, which are calculated based on a valuation of the entity with the relevant percentage applied.
14


The Company completed the following 11 business combinations during the nine months ended September 30, 2020:
Lanier, a Middle Market Partner effective January 1, 2020, was made to expand the Company’s Middle Market presence in the healthcare, higher education, construction, property and non-profit businesses throughout Florida and other states.
Highland, a Specialty Partner effective January 1, 2020, was made to expand the Company’s Specialty presence in the healthcare and cyber insurance businesses and to add capabilities within the real estate business.
AgencyRM, a Medicare Partner effective February 1, 2020, was made to expand the Company’s Medicare business presence in Texas.
VibrantUSA, a Medicare Partner effective February 1, 2020, was made to expand the Company’s Medicare business presence in Washington.
IRP, a Middle Market Partner effective April 1, 2020, was made to expand the Company’s capabilities within the energy and infrastructure business.
Southern Protective Group, a Middle Market Partner effective May 1, 2020, was made to expand the Company's risk consulting capabilities in the medical malpractice market.
Pendulum, a Specialty Partner effective May 1, 2020, was made to expand the Company's specialty risk consulting capabilities in the long-term care and senior living markets.
Rosenthal, a Middle Market Partner effective June 1, 2020, was made to expand the Company’s capabilities within the habitational real estate industry.
TBA/RBA, a Middle Market Partner effective June 1, 2020, was made to expand the Company’s employee benefits business in Tennessee and across the Southeastern U.S.
Fletcher, a Medicare Partner effective July 31, 2020, was made to expand the Company’s Medicare business presence in Washington.
MIA, a Medicare Partner effective July 31, 2020, was made to expand the Company’s Medicare business presence in Tennessee.
The operating results of these business combinations have been included in the condensed consolidated statements of comprehensive income (loss) since their respective acquisition dates. The Company recognized total revenues and net income from these business combinations of $37.1 million and $3.0 million, respectively, for the nine months ended September 30, 2020.
Acquisition-related costs incurred in connection with these business combinations are recorded in other operating expenses in the condensed consolidated statements of comprehensive income (loss). The Company incurred acquisition-related costs from these business combinations of $1.7 million for the nine months ended September 30, 2020.

15


The table below provides a summary of the total consideration and the estimated purchase price allocations made for each of the business acquisitions that became effective during the nine months ended September 30, 2020. The "All Others" column includes amounts for the AgencyRM, VibrantUSA, Southern Protective Group, Pendulum, Fletcher and MIA business combinations.
(in thousands)LanierHighlandIRPRosenthalTBA/RBAAll OthersTotals
Cash consideration paid$24,450 $6,603 $26,223 $75,936 $76,272 $28,634 $238,118 
Fair value of contingent earnout consideration1,628 788 5,521 7,051 7,000 4,624 26,612 
Fair value of equity interest6,119 4,500 7,535 10,147 21,427 2,847 52,575 
Deferred payment— — — — 300 59 359 
Total consideration$32,197 $11,891 $39,279 $93,134 $104,999 $36,164 $317,664 
Cash$2,413 $1,542 $1,694 $954 $ $1,112 $7,715 
Premiums, commissions and fees receivable2,494 5,929 3,229 4,734 8,731 1,718 26,835 
Property and equipment294  123   26 443 
Other assets168 13 11 11  19 222 
Intangible assets— 
Purchased customer accounts4,312  6,250 33,670 53,900 3,489 101,621 
Distributor relationships 6,500    12,880 19,380 
Carrier relationships 659     659 
Software     565 565 
Trade names 214  939 179 77 1,409 
Goodwill25,735 4,276 32,273 56,253 44,264 17,125 179,926 
Total assets acquired
35,416 19,133 43,580 96,561 107,074 37,011 338,775 
Premiums and producer commissions payable(2,954)(6,374)(4,301)(3,427)(2,075)(586)(19,717)
Accrued expenses and other current liabilities(265)(868)   (261)(1,394)
Total liabilities acquired
(3,219)(7,242)(4,301)(3,427)(2,075)(