A business combination is a transaction or other event in which a reporting entity (the acquirer) obtains control of one or more businesses (the acquiree). In a business combination, accounting standards require that the acquirer must recognise and measure the fair values of the identifiable assets acquired and the liabilities assumed from the acquiree at the acquisition date and this exercise is referred to as purchase price allocation (PPA). 

This involves fair valuation of, aside from the tangible assets, of the intangible assets that meet the required criteria for recognition. An important part of this exercise is to arrive at the goodwill (or the bargain purchase amount) resulting from the acquisition.

Certain PPAs can be complex with purchase consideration including the unquoted/ unlisted shares of the acquirer, earn outs – revenue, profit or other types of guarantees which may require fair valuation of the purchase consideration. This requires knowledge and expertise in scenario and probability analysis as well as complex quantitative analysis and financial modeling coupled with modern high-performance computing. Our team members have deep knowledge and expertise in this area.

The goodwill and infinite life intangible assets must be measured and updated, if needed on an annual basis (or earlier if a trigger event occurs), for impairment testing purposes to assess if the value of the goodwill or an intangible asset has been impaired or reduced in value. Impairment testing is an important step for many companies before the audited financial accounts are finalised. We have been the trusted valuer for numerous local and MNC clients where we have been performing impairment testing for several years.  

We also perform valuation of financial investments (assets & instruments) including, loans, redeemable preference shares and equity investments for financial reporting purposes.