According to IFRS 3 "Business Combinations", within an acquisition the purchase price must, from an accounting perspective, be allocated to the assets and liabilities identified. This results in positive or negative goodwill at the acquisition date. The specific implementation of the Purchase Price Allocation is associated with various problems.
As an independent expert we carry out Purchase Price Allocations according to IFRS requirements and thus increase certainty for the board of directors, management and the auditors when dealing with transactions from an accountancy perspective. We divide the process into four phases:
1. Determination of the PPA-strategy
2. Transaction analysis
3. Performance of the Purchase Price Allocation
Due to their scope for amortisation, the values of the newly identified intangible assets and goodwill have a direct impact on the future financial performance of a company. In order to determine an IFRS-compliant PPA strategy, the implications of the purchase price allocation have to be estimated and evaluated at an early stage.
When analysing a transaction, it is necessary first and foremost to determine the relevant purchase price for the PPA. We analyse the transaction in detail (including in particular for earn-out clauses, purchase and disposal rights) and determine the transaction price taking account of the relevant IFRS standards.
The implementation of the Purchase Price Allocation can be divided into the following steps:
Our report to decision makers includes detailed and easy to understand presentation of the valuation as well as the results for intangible asset values and goodwill.
Various declaratory obligations have to be considered in relation to the IFRS in order to enable the recipients of the report to assess the financial implications of the corporate transaction. We know both the minimum requirements as well as best practice.