Clear, compliant, and audit-ready PPA support from AN Valuations
Purchase Price Allocation (PPA) is a critical accounting process that takes place after a merger or acquisition. It involves allocating the total purchase price of a transaction to the acquired assets and liabilities, including the recognition of goodwill and any deferred tax implications. Whether driven by IFRS, Dutch GAAP, US GAAP, or local reporting standards, accurate PPA is not optional, it’s essential for compliance, transparency, and audit approval.
At AN Valuations, we combine technical expertise, local knowledge, and international experience to deliver high-quality PPA valuations that hold up under scrutiny. With international experience and a hands-on approach, we tailor our services to match your deal size, asset mix, and internal capabilities.
In purchase accounting, purchase price allocation is the process of assigning the total consideration paid for a company to its identifiable assets and liabilities. Any excess over the fair value of those net assets is recorded as goodwill.
A standard PPA includes:
Accounting frameworks such as IFRS 3, ASC 805 and RJ 216 mandate that businesses perform a PPA in any business combination. Getting this right the first time prevents costly restatements and audit delays.
AN Valuations offers structured, scalable PPA services with three tiers:
In all cases, we ensure your purchase price allocation withstands auditor review and aligns with applicable financial reporting standards.
✔️ Technical Expertise: Years of experience with IFRS 3, ASC 805, RJ 216 and local GAAP ✔️ Global Reach: International delivery and experience in PPA services ✔️ Audit-Proof Results: Our valuations are prepared with the rigour and documentation standards expected in financial audits, helping clients avoid delays, rework, and compliance risks. ✔️ Scalable Solutions: From SMEs to multinational transactions ✔️ Industry Breadth: Experience across technology, healthcare, manufacturing, consumer goods, utilities, financial services, agriculture, energy, crypto, and more
We speak the language of both your deal team and your auditors, ensuring smooth integration into your closing and reporting process.
The accounting guidelines of most developed nations require a PPA after a business combination where the acquirer obtains control and where the acquirer has an obligation to consolidate accounts. PPA is required under both small company and large company GAAP reporting.
Early engagement with a valuation partner helps to ensure that deadlines are met and audit issues are preemptively resolved.
What is purchase price allocation? Purchase price allocation (PPA) is the process of allocating the total consideration paid in a business combination to the acquired assets and liabilities. This is done to reflect their fair values or fair market values, depending on the accounting regime, for accounting and reporting purposes. The difference between the purchase price and the net identifiable assets is recorded as goodwill. PPA is required under IFRS (IFRS 3), US GAAP (ASC 805), Dutch GAAP (RJ 216), and most other local GAAPs for any qualifying merger or acquisition.
What does PPA include? A complete PPA includes several key elements:
Common intangible assets valued during PPA include trademarks, customer relationships, software, and non-compete agreements. Various other intangibles might be recognized and valued where appropriate.
Other PPA elements can include the following, amongst others:
What are examples of intangible assets in PPA? In a purchase price allocation (PPA), common intangible assets that are identified and valued include customer relationships, proprietary technology, software, brand names and trademarks, non-compete agreements, licenses, permits, provisions, favorable contracts, concessions, IP R&D, backlog, internal-use software, etc. These assets are often not recorded on the target company’s balance sheet but may represent significant economic value and require fair value measurement for accounting and reporting under IFRS 3, ASC 805 or RJ 216.
Do tangible assets or working capital need to be valued in a PPA? Yes. All acquired assets and liabilities need to be (re)measured at fair value (IFRS) / fair market value (US GAAP). Land, buildings, and machinery must be revalued. Agricultural assets, such as livestock or fruit trees must also be revalued. Inventory should be revalued. In some cases, an acquired entity may own non-operational assets such as an art collection or a boat that is not used in the normal operation of the business. Such assets also need to be revalued. AN Valuations and its global network of experts can value any type of asset anywhere in the world.
How is goodwill calculated? Goodwill is calculated as the difference between the total purchase price paid in a business acquisition and the fair value of the identifiable net assets acquired (i.e., total assets minus total liabilities, both at fair value). It represents the premium paid for intangible factors that do not fall under the accounting definitions of assets and liabilities such as buyer-specific synergies, knowhow, workforce, future technologies, future earnings potential, etc. Goodwill is recorded as an asset on the balance sheet. Under some accounting regimes, goodwill is amortized. Under others, it is not amortized but tested at least annually for impairment. In the case of negative goodwill, sometimes referred to as “bargain purchase” or “badwill”, accounting rules on recording this amount differ by accounting regime.
Is PPA required for all acquisitions? No. Although accounting rules differ by accounting regime, goodwill may be required if the transaction qualifies as a business combination and the acquirer has an obligation to consolidate subsidiaries. In many cases, a PPA is required – even for small companies. We encourage you to reach out to us if you are unsure.
How long does a PPA take? A typical purchase price allocation (PPA) takes between 2 to 6 weeks, depending on factors such as the complexity of the transaction, the types and number of assets acquired, the availability of documentation, and the urgency of the audit timeline. Larger or international deals with complex intangible assets may require more time, especially if coordination with auditors is needed.
Need a trusted partner for your next acquisition? Contact AN Valuations for specialist PPA advice, calculation services, and audit-ready documentation. Tailored to your deal, timeline, and compliance needs.
Let’s make your next acquisition audit-proof.