Purchase Price Allocation
Purchase Price Allocation is the process of assigning fair values to all major assets and liabilities of an enterprise, either following a merger or acquisition (for the restated or opening balance sheet) or in testing for impairment of goodwill. All assets are included in the allocation and can be tangible, such as operating machinery and equipment, real property, and intangible, including intellectual property, customer lists, licensing, goodwill, and other intangibles. Click here for a sample list.
The Financial Accounting Standards Board’s (FASB) has issued statements regarding the accounting for purchased assets in FASB ASC 805 – Business Combinations, and FASB ASC 820 – Fair Value Measurements & Disclosures (formerly SFAS 141R and SFAS 157), which requires the valuation of all tangible and intangible assets in order to establish goodwill value, as well as FASB ASC 350 -Goodwill and Other Intangible Assets (formerly FAS142), which requires the subsequent testing for goodwill impairment.
The professionals at Advent Valuation have been providing valuation services for more than ten years. For purchase price allocation assignments, Advent Valuation has teamed with experienced partners in the machinery & equipment and real estate appraisal professions in order to provide our clients a single, coordinated source for asset allocation and goodwill impairment testing services at an affordable cost. Advent, in conjunction with its partners, can now offer full capabilities for regional, national and international asset allocation services, when an independent opinion of value is needed. Some of our projects include:
- $600 million acquisition (by private investor group) of regional newspaper group, including valuation of 18-story downtown office building, printing plant, all equipment and fixtures, and allocation and valuation of intangible assets, including subscriber and advertiser lists, trade names and mastheads, and income-producing URLs.
- Valuation of intangible assets of two European entities (acquired by US public company) involved in manufacturing and worldwide distribution of patented medical devices.
- Intangible assets of financial advisory services provider acquired by publicly traded bank. Financial assets including customer lists, non-compete agreements and leasehold interests.
Purchase price allocation of acquisition by US public company of genetic testing company.
Consulting with Valuations
We often see aspects of a business that no one else does because of the level of due diligence and “investigative” research required when preparing a business valuation. Whether it’s good news or bad news, the insight is always helpful to a business owner interested in working ON their business as much as they work IN their business. Depending on the specific objectives of an engagement, we can share those insights with you, the accountant.
One of the best ways to expand what you currently do for your existing clients is to open up new consulting opportunities that make your clients’ business better. It reminds them why they do business with you.