Companies engaging in business combinations must comply with the Fair Value accounting principles mentioned under Accounting Standards Codification (ASC 805) and should consider an independent valuation of the acquired assets and liabilities.
Purchase Price Allocation refers to the allocation of the transaction value among the assets acquired, liabilities assumed and any non-controlling interest in the target entity at the acquisition date. The excess of the purchase price over and above these identifiable assets and liabilities is recorded as the goodwill acquired by the acquirer.
All the assets and liabilities are recorded at their fair values. The most commonly identified line items are fixed assets, working capital and intangible assets of the target. Fair value estimation of the intangible assets is most challenging for the companies and they increasingly comprise the bulk of the value acquired in today’s deals.
How We Support-
Our valuation professionals provide well-supported, defensible and unbiased purchase price allocations that can stand up to the highest levels of scrutiny. We utilize the following methods to value the intangible assets-
1. Multi-Period Excess Earnings Method (MPEEM)
2. Relief from Royalty (RFR)
3. Cost Approach
4. With and Without Method
5. Greenfield Approach
6. Real Options Method
In-depth analysis and comprehensive reviews are carried out throughout the engagement to ensure accurate value and complying with the highest industry standards. Our ability to understand and determine the accurate allocation of the purchase price has been the cornerstone of our firm’s services.