Purchase Price Allocation (PPA) is a critical requirement under MFRS 3 / IFRS 3 Business Combinations, which governs the accounting treatment for mergers and acquisitions by requiring the acquirer to allocate the total consideration transferred to the identifiable assets acquired and liabilities assumed at their acquisition-date fair values, with any residual difference recognised as goodwill or bargain purchase gain. This process ensures that post-acquisition financial statements faithfully represent the economic reality of the transaction, in compliance with IFRS 13 Fair Value Measurement and MFRS 112 Income Taxes, particularly in relation to deferred tax arising from fair value adjustments. PPA requires the identification and recognition of both tangible assets and separately identifiable intangible assets, such as customer relationships, brands, technology, intellectual property, licences, contracts, and order backlog, which are often not recognised in pre-acquisition financial statements but are material in determining the true value of the business combination.
Our Purchase Price Allocation (PPA) advisory and valuation services provide a comprehensive, end-to-end solution for IFRS 3 compliance and acquisition accounting support. The scope includes detailed analysis and valuation of acquired businesses using internationally accepted methodologies such as the income approach (discounted cash flow and excess earnings method), market approach (comparable transactions), and cost approach (replacement cost method). We perform rigorous fair value measurement of identifiable assets and liabilities, assist in the recognition and valuation of intangible assets, and compute goodwill arising from the transaction. In addition, we assess deferred tax implications resulting from fair value uplifts, ensure compliance with relevant accounting standards, and prepare detailed, audit-ready valuation reports supported by robust financial modelling and defensible assumptions. Our deliverables are designed to meet the expectations of auditors, regulators, and stakeholders, ensuring transparency, accuracy, and compliance throughout the M&A financial reporting process.
