The purpose of the PPA is to allocate the purchase price from an acquisition to the fair value of all assets (including newly identified intangible assets) and liabilities of the newly consolidated target. Acquirors preparing IFRS consolidated financial statements must do this after successful transaction.
When an acquirer obtains control of one or more businesses, IFRS 3 requires acquisition accounting to be applied to all business combinations. This generally requires assets acquired and liabilities assumed to be measured at their fair values (FV) on the acquisition date. This will include the requirement to fair value any identified intangible assets.
Purchase Price Allocations (PPA) most often starts with the identification and measurement of intangible assets that were acquired, such as brand names, customer contracts and relationships, technology and intellectual property. Afterwards, all assets and liabilities are individually revaluated to fair values using asset specific valuation techniques and assumptions. PPA is concluded with the determination of goodwill resulting from the transaction.
Our team of specialists is available to assist you and can tailor our PPA service to your needs and to the specifics of the transaction. Our experienced team is typically composed of valuation and IFRS specialists, specialized in fair value of intangible assets, tangible assets, real estate and valuation of business. We have also access to proprietary market data sources, that must be used for certain assumptions such as royalty rates, discount rates, capital asset charges and other.
We can also perform a preliminary PPA, utilizing our state-of-the-art software in a pre-deal environment for tax planning purposes and potential transfer price adjustments subsequent to closing of a transaction.