Purchase price allocation

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Understanding the impact of purchase price allocation on valuation

Do you need help understanding how purchase accounting will impact earnings post-acquisition under ASC 805 (SFAS 141R) and other regulations? That’s the advantage of having the right valuation advisor involved early in the process. Increasingly complex accounting standards for reporting M&A transactions have introduced the potential for greater earnings volatility.

As financial reporting moves to a fair value model, understanding financial accounting and reporting requirements and how your decisions may impact future earnings is more important than ever. Integrated valuation and accounting advice will allow you to identify issues and understand alternatives so you can make better decisions.

Key challenges posed by ASC 805

  • Acquired in-process research and development capitalized at fair value
  • Changes in accounting for acquired assets and liabilities assumed
  • Changes in recording of some income tax estimates
  • Measurement date for equity consideration changed to close date
  • Re-acquired rights-measured/amortized on remaining title
  • Transaction and restructuring costs generally expensed
  • Earn-outs measured at fair value

 

How PwC can help

PwC’s combined valuation and accounting capabilities can help you better manage the challenges of executing a deal and complying with the new business combinations accounting standards, even for the most complex transactions. Our professionals provide you with the valuation assistance and accounting guidance needed to determine your newly merged company’s opening balance sheet. We understand regulatory risks, anticipate issues before they happen, help you understand the impact on earnings and provide you with real-time advice throughout the deal process.

Contact us

Aaron Gilcreast

Valuation Leader, PwC US

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