Purchase Price Allocation (PPA)
A purchase price allocation (PPA) is a key step following a business acquisition. It is required for business combinations under IFRS 3 and US GAAP ASC 805.
As part of the PPA, the purchase price paid in a transaction is allocated to all identifiable assets and liabilities of the acquired company.
As part of the PPA, the acquired assets and liabilities are (re)valued at fair value. This includes:
- existing assets and liabilities
- as well as previously unrecognized intangible assets, such as customer relationships, brands, or proprietary technologies.
The residual difference between the purchase price and the revalued net assets is recognized as goodwill.
Our short brochure summarizes everything you need to know about PPA.
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Daniel Spring is happy to answer your questions about business valuations. Please feel free to contact him directly.
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