Purchase Price Allocation (PPA)

Purchase Price Allocation (PPA)

PPA Valuation Services

At Valtech Valuation, we specialise in Purchase Price Allocation (PPA), where each asset is valued by our team of experts to ensure reliable financial reporting and compliance.

What is Purchase Price Allocation (PPA)?

PPA is a goodwill accounting process applied in M&A transactions where the acquirer allocates the purchase price of the acquired company’s assets and liabilities at fair value. The difference between the purchase price and net asset value is recorded as goodwill or an adjustment to intangible assets.

Key Considerations in PPA

1. Book Value vs. Fair Value Adjustments

The book values of assets and liabilities often differ 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.

2. Valuation of Intangible Assets

Intangible assets play a crucial role in PPA valuation. Identifiable intangible assets include:

✔ Customer Contracts & Relationships
✔ Internet Domain Names, Patents & Trademarks
✔ Brand Names, Copyrights & Concession Rights
✔ Licenses & Permits (Industry-Specific)
✔ Profit Guarantees & Non-Compete Agreements

While employees are valuable assets, assembled workforces are not considered identifiable intangibles under IAS 38.

3. Case-Specific Considerations

Certain acquisitions involve complex valuation challenges, such as:

  • IFRIC-12 Service Concession Arrangements regarding fair value assessment of financial assets and intangible assets

  • Complex consideration arrangements 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