Purchase Price Allocation Services

Eton Venture Services offers precise, unbiased, and independent purchase price allocation valuations for post-M&A financial reporting compliance.

Our Purchase Price Allocation Process

Why Choose Eton as Your PPA Service Provider?

Eton Venture Services offers precise, unbiased, and independent purchase price allocation valuations for post-M&A financial reporting compliance.
Trustworthy & Transparent

A valuation expert plays a critical role in the PPA process by helping identify and value the acquired company's tangible and intangible assets and liabilities. You can trust Eton’s expertise in various valuation techniques and deep understanding of accounting standards enabling us to provide accurate and defensible allocations, ensuring compliance with regulatory requirements and reducing the risk of financial restatements.

Tailored Approach

We have established best practices for valuation procedures specific to diverse portfolios. Our team takes the time to understand the intricacies associated with each engagement, ensuring a tailored approach that meets your unique needs.

Proven Track Record

Our experts understand the complexity of purchase price allocation, and have a proven track record in helping clients gain confidence in their fair value reporting. Our experience across various business valuation services powers our ability to offer comprehensive and defensible purchase price allocation services.

Unparalleled Expertise

Founded by securities lawyers from top law schools / law firms and staffed with finance professionals trained by the Big Four and other prominent financial services firms, Eton brings intellectual and quantitative rigor unmatched by others.

"As a former Gunderson lawyer, I co-founded Eton to bring the precision, efficiency, and the obsessive client service of corporate securities law to business valuation. I'm especially proud that our worldwide team of Big 4 trained CFAs has adopted that client service mantra wholeheartedly.

Our entire focus is on delivering audit-defensible, rigorous, and timely valuations without the inefficient back-and-forth of other firms. Client service is our religion. We always go the extra mile to overdeliver for every client."

Chris Walton, JD
President & CEO
Eton Venture Services
Previously at Gunderson Dettmer / Stanford Law

Testimonials

Talk to Us

Trusted By Over 1,000 Companies

FAQs

What is purchase price allocation?

Purchase price allocation is the process of assigning the purchase price of acquiring a company to its individual assets and liabilities.

When one company buys another, the total purchase price needs to be distributed among the acquired company’s tangible assets (like equipment and inventory) and intangible assets (such as patents, trademarks, and customer relationships).

This allocation is crucial for financial reporting purposes, ensuring that the acquirer’s balance sheet accurately reflects the value of what was purchased.

We also wrote this complete guide on purchase price allocation so you can understand more about the topic.

The PPA process starts with determining the total consideration paid for the acquisition, which may include cash, stock, debt, or other forms of payment.

Next, the fair market value of the acquired company’s assets and liabilities is determined, with any residual amount allocated to goodwill.

The allocation is based on the estimated useful life and relative value of each asset and liability, which can impact the acquirer’s depreciation, amortization, and tax reporting.

We listed out the detailed steps involved in this purchase price allocation guide.

A Purchase Price Allocation (PPA) affects the income statement mainly through two ways:

  1. Amortization: Intangible assets identified in the acquisition, like customer relationships, are gradually expensed over time. This reduces the company’s reported profit each period.

  2. Impairment Charges: If any acquired assets lose value over time, the company might need to record impairment charges. This reduces reported profits in the period it’s recognized.

 

These adjustments ensure that the income statement accurately reflects the costs associated with acquiring and using assets over time.

Fair value plays a crucial role in PPA, as it ensures that the acquired company’s assets and liabilities are appropriately valued. By using fair value, the acquirer can accurately determine the depreciation and amortization expenses, tax implications, and other financial reporting requirements. Fair value also provides transparency to investors and other stakeholders about the true cost and value of the acquired business.
Some common challenges in PPA include determining the fair value of complex intangible assets, estimating the useful life of assets, and dealing with potential synergies or contingent liabilities. These challenges can require the expertise of valuation professionals, who use various valuation techniques and assumptions to address these complexities. Additionally, differences between US GAAP and IFRS accounting standards can present challenges in harmonizing the PPA process for international transactions.
The time required for a PPA can vary depending on the complexity of the acquired company, the nature and number of assets and liabilities, and the availability of necessary information. Generally, a PPA can take anywhere from a few weeks to several months. Engaging experienced valuation professionals early in the process can help streamline the timeline and improve the accuracy of the allocation.

Featured Insights

Schedule a Meeting