Purchase price allocation that holds up in the first audit after the deal.
VALLARIS™ identifies and values the assets and liabilities you acquired, including brands, technology and customer relationships, and measures the goodwill, under IFRS 3 (SFRS(I) 3 in Singapore).
What is purchase price allocation?
Purchase price allocation (PPA) splits the price paid for an acquired business across its identifiable assets and liabilities at fair value, including intangible assets such as customer relationships, brands and technology. Whatever is left is goodwill. IFRS 3 requires it for every business combination, and allows a measurement period of up to 12 months from the acquisition date to finalise it.
The moments this work is for.
You have just completed an acquisition
The first accounts after the deal need the acquisition recognised at fair value.
Before you sign
You want to know how the deal will look in your profit and loss once the intangibles are amortised.
The auditor has questions
A provisional PPA needs to be finalised within the measurement period.
The work, and what it delivers.
- Intangible assets identifiedCustomer relationships, brands, technology, order backlog and licences.
- Fair valuesEach asset and liability at fair value, with the method explained.
- Goodwill measuredAnd the reasons it exists, for the disclosure.
- Useful livesThe amortisation each intangible asset supports, year by year.
Four steps, one adviser.
- Deal documentsThe SPA, completion accounts and the deal model.
- IdentifyThe intangible assets the business owns and how each earns.
- ValueRelief from royalty, excess earnings and cost approaches.
- ReportA signed report for the accounts and the auditor.
A named signature behind every number.
The allocation decides how the deal looks in your accounts for years. I value the intangible assets the way a buyer priced them, so the story in the accounts matches the story in the deal.
Siong Yoong
About VALLARIS™ →
Standing you can check. Each line names the body behind it.
Chartered Valuer and Appraiser
CVA, Institute of Valuers and Appraisers, Singapore (IVAS).
The group that writes the standards
Member since 2018 of the IVAS Standards & Technical Working Group, which writes Singapore’s business valuation standards.
International Valuation Standards Council
Member, Memberships & Standards Recognition Committee, IVSC, the body that publishes the IVS.
How ready are you for purchase price allocation? See your score now.
Six questions. Your score and focus areas appear as you answer. No email needed.
Answer the six questions to see your result.
0 of 6 answered.
Thirty minutes, confidential, and no fee for the first conversation.
What clients ask about purchase price allocation.
What is purchase price allocation?
Purchase price allocation assigns the price paid for an acquired business to the identifiable assets acquired and liabilities assumed, at fair value, with the remainder recognised as goodwill, as required by IFRS 3.
When is a PPA required?
Whenever a company obtains control of a business, it must apply the acquisition method under IFRS 3, which includes a purchase price allocation in the first financial statements after the acquisition date.
How long do we have to finalise the PPA?
IFRS 3 allows a measurement period of up to 12 months from the acquisition date. Provisional amounts can be adjusted within that period for facts that existed at the acquisition date.
Why does the PPA affect earnings?
Intangible assets with finite lives are amortised, which reduces reported profit each year, while goodwill is not amortised but is tested for impairment annually.
What is a bargain purchase?
A bargain purchase arises when the fair value of net assets acquired exceeds the price paid. IFRS 3 requires the buyer to reassess its measurements and then recognise any remaining gain in profit or loss.
Often needed together.
Impairment testing
Impairment testing checks that an asset, or a cash-generating unit, is not carried above its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use.
Intangible asset and IP valuation
Intangible asset valuation sets the value of assets you cannot touch: patents, trademarks and brands, software and technology, customer relationships, licences and know-how.
M&A advisory
M&A advisory is the work of buying, selling or merging a company: finding the right counterparty, setting the price, testing the numbers through due diligence and negotiating the terms to completion.