Challenge for the balance sheet preparer
International and national accounting requires the allocation of the purchase price for company acquisitions and mergers to the acquired assets and liabilities at the time of initial inclusion in the consolidated financial statements. Intangible assets (customer relationships, patents, brands, etc.) are often the main value drivers for the acquired company.
Identifying and measuring these assets at their fair value represents a particular organizational and technical challenge that requires a detailed analysis of the underlying business model.
High financial significance
The values and parameters determined as part of the purchase price allocation (PPA) (e.g. useful lives) and the residual goodwill may have a material impact on the future net assets and results of operations of the reporting company. At the same time, the purchase price allocation can serve as a basis for assessing the advantageousness of the acquisition compared with other transactions.
As a consequence, the PPA should therefore be closely interlinked with the financial due diligence during the acquisition process.
Capital market relevance
Since company acquisitions are in the increased interest of the public - e.g. investors, banks or control institutions - a purchase price allocation should be carried out and documented in absolute compliance with accounting standards. It is therefore highly advisable for the purchase price allocation to be carried out and documented by an expert third party.
Our PKF consulting services - your advantage
- Implementation of purchase price allocation and documentation by means of expert opinions
Analysis of financial effects on the accounting company even before company acquisition
Discussion of the results of the PPA with the auditors
Support for PPA accounting (Push-Down)