Purchase Price Allocation (PPA) Valuations & Goodwill Impairment Valuations

A PPA valuation can be a Pretty Prickly Analysis.

Today's rigors of financial reporting require that certain assets be carried on your balance sheet at their fair values.  BAS will provide an independent assessment of the fair values of intangible assets that are acquired as part of a transaction, and the subsequent year-end valuations of goodwill and intangible assets. BAS will base its analysis on concrete evidence from the marketplace, and will spend time making sure the key inputs and assumptions used in the valuation of the intangible assets are entirely consistent with the key inputs and assumptions that were utilized in the valuation of the entire enterprise.

Our valuation process, sources of market data, and application of the data to a client's unique situation have provided auditors and other independent accountants with the comprehensive documentation they need to comply with their financial reporting requirements.

 

BAS has worked extensively with independent accounting firms to assist their clients by performing the following tasks:

    1. properly allocate an initial transaction price to the tangible and intangible assets acquired in a deal (a Purchase Price Allocation valuation);
    2. determine as of a year-end valuation date whether the carrying value of goodwill on the company’s balance sheet is greater than the fair value of the  goodwill, resulting in goodwill impairment (a Goodwill Impairment valuation); and
    3. independently reexamine the fair value of the intangible assets as of a year-end valuation date (an Intangible Asset valuation).

Examples of common categories of intangible assets that are frequently valued by BAS are:

    1. Customer Relationships
    2. Brands and Tradenames
    3. Noncompete Agreements
    4. Supply Agreements
    5. Patents
    6. Distribution Networks
    7. Process Knowhow
    8. Specialized Software
    9. Workforce-in-Place

BAS also has extensive experience valuing contingent assets such as seller promissory notes with contingent payout provisions, and Earnout Agreements.  A determination of the fair value of these contingent liabilities is necessary for financial reporting purposes.

Under ASC Topic 805, and in accordance with ASC Topic 350, purchase price allocations account for business combinations by recognizing the costs of acquisitions and liabilities as tangible assets and separately recognizing (and later amortizing) intangible assets based on their fair values.

 

Other valuation services:

ESOPs | Corporate Valuations | Litigation Support | Fairness and Solvency Options