Purchase Price Allocations
The need for third party appraisals has continued to increase, resulting from heightened awareness of independence issues and the complex nuances associated with fair value financial reporting requirements. Accurate fair value estimates can be critical in accounting for the acquisition of businesses and intangible assets.
FairValue Advisors assists management with the identification and appraisal of intangible assets during the purchase price allocation process for compliance with ASC 805 (precodification SFAS 141). We also provide management with an estimated remaining useful life of the intangible asset for purposes of amortization.
ASC 805 defines the procedures required for the financial accounting and reporting of goodwill and other intangible assets acquired in a business combination at acquisition. This accounting standard establishes specific criteria for the recognition of intangible assets separately from goodwill, and requires a fair value determination for individual intangible assets acquired. These fair value estimates and allocations can significantly affect the financial reporting of current and future operating results.
A critical step in the valuation process is testing the purchase price to determine if it reflects fair value from a typical market participant’s perspective. For deal terms that include non-cash consideration such as earn-outs, a note held by the seller or roll-over equity, a cash equivalent purchase price must be estimated.
FairValue Advisors assists corporations and their auditors in satisfying these fair value requirements, by providing independent and comprehensive appraisals of the intangible assets and estimating a cash equivalent deal price. Our appraisal process and reports are designed to satisfy the auditor’s requirements and fully comply with FASB’s financial reporting standards.