Purchase Price Allocation (PPA)

Following an acquisition, the purchase price must be allocated to the identifiable assets and liabilities of the acquired business. A Purchase Price Allocation (PPA) is an essential part of financial reporting and is required under IFRS, Dutch GAAP and US GAAP.

A carefully prepared PPA provides insight into the value of the acquired business and forms the basis for the correct accounting treatment of the transaction.

What is a Purchase Price Allocation?

A Purchase Price Allocation allocates the purchase consideration of an acquired business to the identifiable assets and liabilities at fair value. This includes the recognition of intangible assets, tangible assets and goodwill.

The outcome of a PPA affects future financial reporting, for example through the amortisation of intangible assets and the annual assessment of goodwill.

When is a PPA required?

A Purchase Price Allocation is required when a business acquisition results in a transfer of control and the transaction is accounted for under IFRS, Dutch GAAP or US GAAP.

A PPA also provides the basis for:

• annual impairment testing;
• assessing value creation following an acquisition;
• the correct accounting treatment of the acquisition.

Our approach

A PPA requires a combination of financial analysis, valuation expertise and knowledge of the relevant financial reporting standards. Our Registered Valuators support you throughout the entire process.

We assist with:

• pre-PPA analyses;
• the preparation of Purchase Price Allocations;
• independent reviews of existing PPAs;
• coordination with auditors;
• impairment testing and valuation models.

You receive a clear and well-supported report explaining the valuation, assumptions and methodology applied.

Why choose RSM?

Our Registered Valuators combine expertise in financial reporting, valuations and transactions. By working closely with our Corporate Finance and Due Diligence specialists, our analyses are fully aligned with the practical aspects of mergers and acquisitions.

We support private equity firms, mid-market businesses and internationally operating organisations with complex valuation matters.

Need support with a Purchase Price Allocation?

Would you like to know more about Purchase Price Allocation or require support following an acquisition? Our Registered Valuators are happy to assist.