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Financial Valuation

Financial Valuation

Financial valuation is a central tool in establishing prices, justifying positions to stockholders and satisfying government concerns in the course of corporate mergers, acquisitions, refinancing and structuring. 

1. Purchase Price Allocation

Purchase Price Allocation (PPA) is the process in which fair and new values are assigned to all assets, as well as liabilities, based on the paid price of an acquired business entity following a merger or an acquisition. The need for this process stems from the fact that the book values of many companies are considered to be less than market values.

PPA aims at allocating new values that are characterized as accurate which allows  arriving at a net residual value that is eventually attributed to goodwill, which is subject to annual impairment tests rather than amortization as in the case of other intangible assets.

2. Goodwill Impairment Testing 

After the Financial Accounting Standards Board has adopted the Statement of Financial Accounting Standards 142, audited companies are required to test goodwill at least once annually for impairment.

Goodwill impairment takes place when the value of the goodwill of a business unit declines to an amount less than the carrying value of the goodwill on the company's books.

TAG-Value provides you with a complete set of tests that enables you to determine the annual value of your goodwill.

 

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