Looking back on 2020, we will probably remember first and foremost the impact of COVID-19. As usual, you will find the latest macroeconomic developments...Read More
According to IRFS 3 “Business Combinations”, the purchase price paid for an acquisition must be allocated to the identifiable assets and liabilities according to the applicable accounting rules. This results in positive or negative goodwill at the acquisition date. There are number of problems involved in practical applications of the Purchase Price Allocation (“PPA”).
Thanks to the large number of PPAs we have handled and our long-standing collaboration with audit firms, we have a great wealth of experience to share with our customers to meet their specific needs. We divide the process into four phases:
Due to the possibilities of amortisation, the values of the newly identified intangible assets and goodwill have a direct impact on the company’s future financial performance. In order to establish an IFRS-compliant PPA strategy, the implications of the purchase price allocation have to be estimated and evaluated at an early stage.
The first step in analysing a transaction is to determine the relevant purchase price for the PPA. We analyse the transaction in detail (including earn-out clauses and purchase and disposal rights) and measure the transaction price according to the relevant IFRS rules.
Implementing the Purchase Price Allocation basically involves the following steps:
Our report to decision makers includes a detailed and easy to understand account of the valuations and of the resulting carrying amounts of the intangible asset and goodwill.
IFRS 3 requires compliance with certain required disclosures to enable the company’s stakeholders (especially the investors & creditors) to assess the financial impact of a business combination. We know both the minimum requirements and best practices.
According to IAS 36, the goodwill resulting from a transaction and all other intangible assets with indefinite lifetime must be tested for impairment each year and whenever certain “Triggering Events” occur. IFBC can help you with the following:
The impairment model should be periodically reviewed to ensure IFRS-compliance and the quality and topicality of the data used (especially the cost of capital). With our standardised method, we are able to efficiently check the impairment testing for compliance with the IFRS and best practices and to identify any needs for adjustment of the processes, models and valuation parameters.
Setting up standardised processes and models for impairment testing can ensure both efficient performance and a high degree of reliability in operational implementation.
Since the WACC (Weighted Average Cost of Capital) is of vital importance in corporate finance management, such figures should be summarized in a comprehensive WACC concept covering the different fields of application (including CAPEX, Acquisitions, Performance Management and IFRS). The WACC used for impairment testing must comply with both IAS 36 and Corporate Finance principles.
Share-based payments are used by many companies, especially by listed corporations. IFRS 2 gives clear guidelines for accounting for such payment instruments. The valuation method and the accounting treatment, for example, are determined by the chosen method of settlement (shares or cash). When designing an employee profit-sharing plan in accordance with these regulations, it is therefore necessary to analyse the implications for measurement and recognition. We assist our customers with designing variable payment instruments and with their periodic valuation.
IFRS accounting for financial instruments involves complex valuation issues, especially for the valuation of derivatives, convertible bonds and warrant bonds. The relevant standards IAS 32 and IAS 39, and the new IFRS 7 and IFRS 9 have been undergoing constant changes and updates for quite some time now and their practical applications are complex. Since financial instruments must be periodically revalued at the reporting dates, we recommend implementing a standardised measurement process. IFBC is a specialist in such issues, among others.
IFBC was assigned by Swiss Post to develop a standardized model for the valuation of acquired customer bases in order to be able to recognize these intangible assets in the balance sheet in accordance with IFRS. The valuation methodology used in the model takes into account both the requirements defined by IFRS in this context as well as the best practice for the valuation of intangible assets. The standardized model structure ensures that the Excel-based model is highly efficient and user-friendly.
The Swiss Post is Switzerland’s national postal provider. In addition to traditional postal services, the group provides logistic, transport, communication as well as retail banking services.
IFBC was mandated by Galenica to analyze the impact of IFRS 16 on the goodwill impairment test. Both the determination of free cash flows and the calculation of the cost of capital had to be adjusted in accordance with IFRS 16 to ensure that the result of the impairment test was the same as before IFRS 16. The transparent presentation of the valuation-related effects of IFRS 16 formed the basis to define how the new leasing standard should be applied in company valuations at Galenica.
Galenica is the leading fully integrated healthcare provider in Switzerland and operates the largest pharmacy network in Switzerland.
IFBC supports Vifor Pharma Group in the annual impairment process with an update of the cost of capital to be applied. The update is based on a cost of capital concept developed for Vifor Pharma, in which the calculation principles for the individual parameters and the handling of different currencies were defined as basis for the goodwill impairment testing.
The Vifor Pharma Group is a global specialty-pharmaceutical company headquartered in Switzerland. The company’s goal is to become a global leader in iron deficiency, nephrology and cardiorenal therapies.
As part of a going private, Oriflame Group was entirely taken over in 2019 by the Walnut BidcoPlc, a company controlled by the majority shareholder of Oriflame. Within this transaction, a purchase price allocation (PPA) in accordance with IFRS 3 had to be performed. IFBC was engaged with the implementation of the PPA as well as with the development of a standardized impairment model.
Oriflame Group is a globally operating Swedish cosmetics company. Oriflame’s cosmetic products are distributed through a network consisting of over 3 million representatives in about 60 countries.
On 29 January 2021, OFFIX Holding AG (which belongs to the Swiss PEG Papeteristen Einkaufs-genossenschaft) and the Swiss Office World Holding AG (which belongs to the int...Read More