Evaluate buying a company, prospect, negotiate, conduct due diligence, negotiate further, have the support of advisors and lawyers, and finally acquire a company aiming for expansion and valuation growth. And an M&A doesn't stop there: value creation also involves the contribution of the PPA - Purchase Price Allocation, which is prepared after the completion of the M&A transaction.
Allocating the purchase price gives the buyer the identification of acquired intangible assets and liabilities and their respective economic useful life. The benefit of this is the amortization of intangible assets, reducing the taxable income base.
Determining the actual purchase price, understanding the underlying operational and market assumptions used as the basis for the purchase price paid, and assessing the recently identified assets is the challenge and at the same time the opportunity addressed by PPA.
In addition to intangible assets and liabilities, goodwill is an item designed to capture the increase in the purchase price over the fair value of the target company's assets.
Most acquisitions include a premium for the transfer of control, as an incentive is typically needed for the sale to be approved by existing shareholders.
Goodwill acts as a "plug" that ensures the economic and financial equation remains true after the transaction.
In an acquisition transaction, the allocation of the purchase price is a practice in which the acquirer allocates the purchase price to the assets and liabilities of the target company acquired in the transaction. The allocation of the purchase price is an important step following the completion of a merger or acquisition.
𝗧𝗲𝗿𝘂𝘀: 𝗱𝗮𝘁𝗮, 𝗶𝗻𝘁𝗲𝗹𝗹𝗶𝗴𝗲𝗻𝗰𝗲, 𝗮𝗻𝗱 𝗮𝗰𝘁𝗶𝗼𝗻𝘀!
𝗖𝗼𝗻𝘁𝗮𝗰𝘁 𝗧𝗲𝗿𝘂𝘀 𝗿𝗶𝗴𝗵𝘁 𝗻𝗼𝘄: 𝗰𝗼𝗻𝘁𝗮𝘁𝗼@𝘁𝗲𝗿𝘂𝘀𝗰𝗼𝗻𝘀𝘂𝗹𝘁𝗼𝗿𝗶𝗮.𝗰𝗼𝗺.𝗯𝗿 / +𝟱𝟱 𝟬𝟭𝟭 𝟮𝟱𝟬𝟯-𝟲𝟳𝟰𝟳 / 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗪𝗵𝗮𝘁𝘀𝗔𝗽𝗽 +𝟱𝟱 𝟬𝟭𝟭 𝟵𝟭𝟱𝟲𝟳-𝟬𝟱𝟲𝟬.
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