M&A Valuation
Purchase Price Allocation (PPA)
Under ASC Topic 805 and in accordance with ASC Topic 350, purchase price allocations account for business combinations by recognizing the costs of acquisitions and liabilities as tangible assets and separately recognizing (and later amortizing) intangible assets based on their fair values.
Our expertise and independence have made us a leading provider of valuation services for business combinations. Our professionals offer in-depth understanding of the statement's valuation requirements as well as qualified insights into key issues of concern to regulatory bodies. They assist with identifying recognizable intangible assets and amortization, and assign intangible assets and residual purchase price to reporting units.
International Business Combination
The release of International Financial Reporting Standards 3: Business Combinations ("IFRS 3") and its revisions have resulted in a high degree of convergence and also some significant differences-with ASC Topic 805.
IFRS 3 requires a rigorous and comprehensive process for the identification, valuation and determination of the remaining amortizable life of intangible assets acquired in a business combination along with the fair valuation of the tangible assets. The rules are complex and subject to interpretation, resulting in increased scrutiny on the valuations required for purchase accounting purposes. Royal Assets is well positioned to assist with both tangible and intangible asset valuations.
Goodwill Impairment Testing
Under ASC Topic 350 and IAS 36, goodwill and indefinite lived intangible assets are periodically tested for impairment after initial recognition. Our professionals have broad expertise in the initial recognition of values and subsequent impairment testing as well as the interaction of the two standards. We assign the acquired assets, liabilities assumed and residual purchase price to reporting units. We also estimate the fair value of the reporting units and indefinite lived intangible assets. Additionally, we provide estimates of the implied residual value for reporting units where fair value is below the carrying value.
Contingent and Non-Cash Consideration
One of the recent changes in the IFRS 3 is the requirement to recognize contingent consideration at fair value on the acquisition date. Subsequently, a contingent consideration asset or liability will be re-measured to fair value at each reporting date until the contingency is resolved and any corresponding change in recorded value will often impact earnings. The requirement to measure the acquisition-date fair value of contingent consideration raises a number of important valuation and M&A transaction issues.
The valuation of contingent consideration poses a new challenge for the financial reporting team. Royal Assets has a dedicated team to address the toughest issues raised by the revisions to IFRS 3.
Equity Awards and Share-Based Payment
Estimating the value of equity awards and share-based payments depends on a number of variables, and often requires complex modeling to incorporate unique terms and complex risks. Royal Assets assists both public and private organizations with stock compensation planning and financial reporting.
Royal Assets' valuation models are tailored to our clients' needs. We help companies select the most appropriate approach and estimate all required parameters. We deliver a well-supported valuation that fulfills FASB ASC Topic 718, IFRS 2, or other country specific financial reporting requirements.
Please send email to info@royalassets-capital.com if you have any enquiry about this topic. Our professionals will reply to you as soon as possible.
