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Valuations financial reporting

Valuations for financial reporting purposes

Valuations for financial reporting purposes

Our team of Valuations experts are ready to provide personal advice tailored to your needs. Read more below to find out how they can help you concerning valuations for financial reporting purposes or click below to scroll to the topic of your choosing.

Valuations for financial reporting purposes:

Business combinations under IFRS 3, also referred to as Purchase Price Allocations

Purchase Price Allocations (PPA) are transactions or other events whereby an acquirer obtains control of one or more businesses. IFRS 3 requires acquisition accounting to be applied to all business combinations in its scope. This generally requires assets acquired and liabilities assumed to be measured at their fair values on the acquisition date. 

One of the more important aspects of a PPA is the identification and measurement of intangible assets that were acquired, such as brand names, customer contracts and relationships, technology and intellectual property.

Our team of experienced specialists is available to assist you and can tailor our PPA service to your needs and to the specifics of the transaction. Our team is typically composed of valuation and IFRS specialists, assisted by tax and pension specialists for certain items.

Accounting support

Our team is ready to help you throughout the entire transaction cycle, offering their guidance from start to finish as well as focused approach on specific phase within the entire cycle. Our accounting support valuations team has the expertise to provide valuations for financial reporting purposes under BE GAAP or under IFRS (including valuations in the framework of IFRS 3, IFRS 16, IAS 36).

Accounting support

Purchase Price Allocation along the transaction cycle

Pre-deal preliminary PPA analysis includes the identification and a high level valuation of acquired tangible and intangible assets as well as assumed liabilities. It also includes an estimation of remaining useful lives and the documentation of the conclusions on a preliminary basis with limited information for tax planning and potential transfer price adjustments subsequent to closing of a transaction.

Account supporting

Reconciliation of Purchase Consideration and PPA

Impairment testing (IAS 36 or BE GAAP)

Impairment testing is a complex area of financial reporting that requires careful judgement and is subject to increased scrutiny by regulators. IAS 36 Impairment of Assets sets out the procedures that entities must apply to ensure that their assets are carried at no more than the amounts expected to be recovered through the use or sale of the assets. We can guide you through how the requirements of IAS 36 are applied in practice.

The new IFRS 16 standard effective January 2019 may impact both a Cash Generating Unit`s (CGU) carrying amount and the way the recoverable amount of the CGU is measured. Companies should ensure consistency between the carrying amount and the recoverable amount of a CGU in an IAS 36 calculation, as well as take into account the more general impact of IFRS 16 on valuations (DCF approach as well as the multiples approach).

Accounting support 3

Determination of Incremental Borrowing Rates (IFRS 16)

Due to the introduction of IFRS 16 Leases, lessees are required to recognize a lease liability and corresponding right-of-use asset for all operating leases in their financial statements from January 2019 onwards. The determination of a discount rate is an important step in determining the present value of the lease payments. If the interest rate implicit in the lease cannot be readily determined, the lease payments can be discounted using the incremental borrowing rate (IBR). [IFRS 16.26, 63(D), 68]

The IBR is the rate of interest that a lessee would have to pay to borrow, over a similar term and with a similar security, the funds needed to obtain an asset of a similar value of the right-of-use asset in a similar economic environment. We can assist in determining the appropriate incremental borrowing rates for your leases. 

Investment and transactional advice

Our valuations specialists help you analyze investment or divestment opportunities. This includes guidance on joint ventures and alliances where valuation advice can help in pricing negotiations or in the final investment decision, as well as equity splits at the time of forming the entity or at exit. The integration of due diligence findings into the valuation analysis is integral to this process. 

 

Our team can help you assess and evaluate investment opportunities in:

1. Start-ups and scale-ups

Although the typical valuation approaches are relevant in a start-up or scale-up context, it is likely that none of the methods will provide conclusive results for the companies that have no historical track records. Which is why considering different valuation approaches is vital. We aim to actively assist young, dynamic start-ups (or scale-ups) and its funders on this matter.

One of the key items is to understand the potential market size for the start-up’s (or scale-up’s) products or services and the share that it might be able to take as well as the synergy potential in case the potential investor is an industry player.

2. Joint ventures and alliances

We are able to advise you on all valuation aspects during the lifecycle of a joint venture or alliance. If this happens in an international context we will include local relationships and expertise in our team so you have the full understanding of the strategic, financial, operational and legal implications in creating and setting up a joint venture.

From entering into a joint venture, involving the identification of contributed assets and the ex-ante valuation of the joint venture to valuation matters that arise on exit, our network of Deal Advisory professionals helps you preserve maximum value at every stage of the joint venture lifecycle by focusing on the key questions:

  • What are the key activities to enter into a partnership?
  • How do I design a robust partnership, built to last?
  • How do I operationalize this new partnership?
  • How do I ensure that cultural issues do not become an obstacle to the alliance?
  • Is my portfolio of partnerships delivering all possible value?

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