Purchase price allocation (PPA) is an application of goodwill accounting whereby one company (the acquirer), when purchasing a second company (the target), allocates the purchase price into various assets and liabilities acquired from the transaction.
With respect to the assignment of goodwill and other asset values, valuations for financial reporting purposes involve the allocation of asset values at the reporting unit level, and the acquired assets can be added to an acquirer’s existing reporting units.
A Typical Purchase Price Allocation
Book Value Being Adjusted to Fair Value
Book values of assets and liabilities are often different from their fair values. In allocating the purchase price to these assets and liabilities, we step, or write, them up/down to reflect their fair values.
Valuation of Intangibles Assets
Examples of identifiable intangible assets may include customer contracts, Internet domain names, patents and trademarks, brand names, copyrigts, concession rights, non-compete agreements, licences or permits in specific regulated industries, profit guarantees etc. As much we value our employees, assembled workforces are not considered identifiable intangibles under IAS 38.
Case Specific Considerations
IFRIC-12 Service Concession Arrangements regarding fair value assessment of financial assets and intangible assets
Complex consideration arrangement such as earnouts, profit guarantees, non-cash consideration such as convertible bonds and convertible preference shares
Assessment of synergy
Target group consists of a large pool of project companies or different business segments
Target group consists of companies from different geographical locations
Valtech’s team has provided valuation advice to over 200 listed companies in Hong Kong, China, Singapore, Taiwan, Australia, the United Kingdom, the United States and Germany.
Our valuation team is formed by a team of professional from multiple disciplines including audit, financial modelling, tax, internal control and surveying. Our management adheres professional excellence. Abundant resources are reserved to develop standardized policies and procedures for quality control. In every valuation engagement, Valtech would arrange a team of consultant with both accounting (CPA) AND finance (CFA) qualifications whenever possible.