Bankruptcy Court Uses Purchase Price Allocation to Determine Value
In the case of In Re S-Tek 1, LLC, the Bankruptcy Court utilized the purchase price allocation (PPA) as a reference to determine some of the values of specific assets as of the date of the purchase transaction, which led to some interesting results.
The Legend of Weighted Average Return on Assets and Benchmarking Purchase Price Allocation Data
The author's research shows that only current assets, non-competes, and customer relationships have any predictability to WACC in limited industries. In general, when intangibles have significance, their coefficients are negative, which reduces WACC and implied risk. This finding supports the claim by Lev and Gu (2008) that intangibles are important assets, which reduce, not increase risk. The concept that intangible always should have a premium above WACC is unfounded, and the premise of ARM 34 that intangibles are ancillary assets is outdated. The author suggests and alternative method to use purchase price allocation data to support the selection of premiums above WACC.
IP more prevalent in PPAs, says Houlihan Lokey study
Trademarks and trade names were identified in 50% of M&A deals in 2015, up from 45% in 2014, according to the 2015 Purchase Price Allocation Study from Houlihan Lokey.
‘Purchase Price Allocation Study’ for 2014 released
Houlihan Lokey has completed its “2014 Purchase Price Allocation Study.”
PPA breakdown for air freight and logistics firms
Goodwill represents 56% of the purchase price in recent transactions in the air freight and logistics industry, reports Valuation Research Corp. (VRC).
Purchase Price Allocation: Why Now?
Statement of Financial Accounting Standards No. 141, Business Combinations ("SFAS 141"), drew a sharp distinction between goodwill and other intangible assets acquired in a transaction. As a result, the allocation of the purchase price to the various asse ...
Purchase price allocation shifts away from goodwill
More value is being allocated to identified intangible assets and less to unidentified goodwill, according to a report from Houlihan Lokey on purchase price allocation.
New article by Ibbotson challenges common wisdom on importance of asset allocation
In “The Importance of Asset Allocation,” well-known researcher Roger G. Ibbotson, founder of Ibbotson Associates ...
Purchase Price Allocation and Choice of the Valuation Methods
As known, the purchase price allocation (PPA) process implies the valuation of tangible and intangible assets to allocate the price paid to the assets acquired. The rationale that drove the standards setters (FASB and IASB) in the formulation of the relevant standards (SFAS 141 and IFRS3) was to give a full explanation of the purchase price (PP) paid to the stakeholders of the acquiring company. During the PPA process, this simple, underlying rationale of the ...
Houlihan Lokey updates its PPA study
Analysts at Houlihan Lokey have released its 2019 and 2020 Purchase Price Allocation Study, which examines key data points of purchase price allocations (PPAs) recorded by U.S. public registrants.
Understanding Tax Amortization Benefit Considerations and the International Impact
When valuing a foreign target company in the context of a purchase price allocation, the local tax rules within the company’s jurisdiction often go unnoticed, but they should be considered and applied pursuant to the acquisition structure.
Cost of Capital Estimation for Intangibles Valuation in Purchase Price Allocation
One of the most critical phases in the Purchase Price Allocation process is represented by the determination of appropriate Costs of Capital to use in the application of income methods for the valuation of the identified intangible assets. In fact, the segregation of goodwill in the values of different identified intangible assets is a process that must be carried out in a consistent way to avoid under- or overvaluation of the assets and a consequent ...
Global BV News: Pretransaction PPAs increasing in GCC region, says Deloitte report
The growing importance of intangible assets has triggered an increased number of stakeholders from within the Gulf Cooperation Council (GCC) requesting a pretransaction purchase price allocation analysis, according to a new report from Deloitte Middle East in collaboration with the Saudi Authority for Accredited Valuers (TAQEEM).
In Allocation Dispute Related to § 363 Sale, Bankruptcy Court Bridges Experts’ Value Gaps
Bankruptcy court performs allocation analysis to divide proceeds from section 363 asset sale between two competing lenders, finding debtor’s intellectual property is most valuable asset; court notes that, at time of sale, debtor was neither healthy going concern nor subject of forced liquidation.