Purchase Price Accounting or Intangible Asset Valuation (ASC 805 | FAS 141R)

If you have recently merged with or acquired another company, you will be required to allocate the purchase price of the transaction to the acquired assets at fair market value.  Determining the fair market value of intangible assets is a tricky valuation that should be performed by a competent and qualified valuation firm.  Trust Scalar Partners to help you properly identify the value of your intangible assets.

Background on Mergers and Acquisition Accounting

In late 2007, the FASB released a set of broad changes to the rules governing mergers & acquisitions as well as non-controlling interests. These changes went into effect on January 1, 2009. In addition to a broad set of accounting rule changes included in the new standards, there were also significant changes to accounting-related valuation standards. The primary change requires that all assets and all liabilities of business combinations (whether full, partial, or step acquisitions) be recorded at their fair values on the acquisition date, with very limited exceptions.

Purchase Price Allocation and Valuing Intangible Assets

Purchase Price Allocation valuations involve identifying three separate values that the acquiring company will need for its financial statements:  the tangible value of acquired assets, the intangible value of acquired assets, and the goodwill (or negative goodwill) resulting from the transaction.  These valuations are somewhat more complex than simply finding the fair market value of an entire company or entity since they involve carefully separating the value of the transaction into the three categories above as well as identifying all material tangible and intangible assets of the acquired entity.

Scalar Partners generally uses the following process steps:

1. Identify and value tangible assets based on standard market valuation techniques
2. With management, specify intangible assets requiring valuation
3. Select appropriate valuation methods for each intangible asset and perform valuation
4. Identify and value the residual positive (or negative) goodwill

Our Solution

Companies and auditors will need to turn to an experienced valuation firm as they work to determine the value of their intangible assets.  Scalar Partners specializes in valuation advisory services and is a leading provider of intangible asset valuations for growing private companies.  We look forward to partnering with you to make this process rapid, easy, and affordable.

Request information about purchase price valuation services.