Purchase Price Allocation Valuations (PPA) in Sydney
Monita prepares purchase price allocation valuations that assign fair values to the assets acquired in a business combination, for accounting and tax.
What a PPA Valuation Involves
Fair value allocation of the purchase price across identifiable assets and liabilities following a business combination or acquisition – to support the acquirer's accounting under AASB 3 / IFRS 3.
Who Needs One?
CFOs, M&A advisers, auditors and acquiring entities.
- Property, plant & equipment
- Intangible assets & goodwill
- Customer relationships & IP
- Inventory & financial assets
Purchase Price Allocation Valuations in Sydney
A purchase price allocation (PPA) valuation measures the fair value of the assets acquired and liabilities assumed when a Sydney business buys another business. Monita values the tangible assets in-house, including property, plant and equipment, and works with the acquirer's finance team and auditor on the allocation.
We value; your auditor decides the accounting treatment. The accounting entries, and any tax outcome, are for your accountant and auditor to confirm.
Typical Sydney acquirers include private groups buying a competitor, listed companies adding a subsidiary, and private equity-backed businesses. The valuation scope depends on what was bought and which assets are material to the accounts.
AASB 3 and Business Combinations
Under AASB 3 (the Australian version of IFRS 3), the acquirer allocates the cost of the acquisition to the identifiable assets acquired and liabilities assumed, based on their fair values. Fair value follows AASB 13: an exit price between market participants at the acquisition date. Anything left over is recorded as goodwill. If the net assets acquired exceed the price paid, the difference is a bargain purchase gain.
The acquisition date is the date the acquirer obtains control. All values are struck as at that date, so the date is agreed with your accountant before work starts.
What Is Valued in a Purchase Price Allocation
A PPA covers tangible and intangible assets. Identifiable intangibles must be recognised separately from goodwill, so they need to be identified and valued.
- Property, plant and equipment, including specialised assets
- Inventory
- Customer relationships and contracts
- Brands, trade names and technology
- Patents, trademarks and other intellectual property
- Non-compete agreements
Goodwill and Later Impairment Testing
Goodwill is not valued directly. It is the residual after identifiable assets and liabilities are measured at fair value. Under AASB 136, goodwill and intangibles with indefinite lives are generally tested for impairment each year, so the PPA sets the starting point for later tests.
The useful lives given to acquired intangibles affect how they are amortised. Your auditor will usually review the assumptions closely.
How the Work Runs
We agree the acquisition date, the assets in scope and the reporting deadline with the acquirer and its auditor. We collect the transaction documents and financial information, inspect the tangible assets where needed, and value each asset class using market, cost or income approaches as suited to the asset.
The report sets out the methods, inputs and assumptions so the allocation can be reviewed. The timeline is agreed at the start, because it depends on the number and type of assets, and on whether intangibles are in scope.
Where the tangible assets are spread across several sites, we plan inspections early so they do not hold up the reporting timetable.
PPA, Due Diligence and Impairment: How They Differ
A due diligence valuation happens before the deal to test the price. A PPA happens after the deal to allocate the price for the accounts. An impairment test happens later, to check carrying amounts. Each has its own purpose, so one valuation should not be reused for another without checking with us and your auditor.
How a Monita Valuation Works
Free consultation
We talk through the purpose, the valuation date and what the report is for.
Scope and fee
You get a firm fee estimate and a delivery date before any work begins.
Valuation
We gather the evidence, inspect where needed and apply the method that suits the purpose.
Report
A clear report setting out the basis, the evidence and the reasoning, ready for your adviser, lender or auditor.
Purchase Price Allocation FAQs
What is purchase price allocation (PPA)?
It is the allocation of the price paid in an acquisition across the identifiable assets acquired and liabilities assumed, measured at fair value, with any remainder recorded as goodwill. A PPA valuation provides the fair values the acquirer needs for that allocation.
When is a PPA valuation needed?
After a business combination, when the acquirer must measure the acquired assets and liabilities at fair value in its accounts. Your accountant or auditor can confirm whether the transaction is a business combination under AASB 3 and when the figures are due.
Do you provide purchase price allocation in Sydney?
Yes. Monita prepares purchase price allocation valuations for Sydney acquirers, including property, plant and equipment, and works with the acquirer's finance team and auditor. We cover the valuation. The accounting treatment is for your auditor and accountant.
What is the difference between PPA and goodwill?
PPA allocates the purchase price to identifiable assets and liabilities at fair value. Goodwill is what remains after that allocation, so it is a residual, not a separately valued asset. A more thorough identification of intangibles generally leaves less in goodwill.
Which intangible assets are usually valued?
Common examples are customer relationships, brands and trade names, technology, patents and trademarks, and non-compete agreements. Which ones apply depends on the business and on whether each meets the recognition criteria, which your auditor will assess.
What valuation methods are used in a PPA?
The market, cost and income approaches described in AASB 13. Tangible assets often use market or cost evidence. Intangibles often use income methods such as discounted cash flows. The right method depends on the asset and the data available.
What is the acquisition date and why does it matter?
It is the date the acquirer obtains control of the target. Fair values are measured as at that date, not at the signing or reporting date, so the report must use the correct date. Confirm it with your accountant before we start.
How is a PPA different from a due diligence valuation?
Due diligence is done before the deal to test the price and risks. A PPA is done after the deal to allocate the price for the accounts. A due diligence valuation can inform a PPA, but it is a different purpose, so a separate report is normally needed.
How does PPA relate to impairment testing?
The PPA sets the carrying amounts of acquired assets and goodwill. After that, goodwill and indefinite-life intangibles are generally tested for impairment under AASB 136 each year. Assumptions in the PPA often feed into later tests, so consistent documentation helps.
Does a PPA matter for tax?
It can, because the values assigned to assets may affect tax outcomes. We are valuers, not tax advisers. We provide the fair values, and your accountant or tax adviser decides how they are used for tax. Tell us at the start if a tax purpose applies.
Who uses the PPA report?
The acquirer's finance team, its auditor and its advisers. Requirements differ between reviewers, so tell us who will receive the report. We will not assume it will be accepted by any party, but we write it so the basis and assumptions can be followed.
What information do you need to start?
The acquisition date, sale and purchase agreement, financial statements of the target, a list of assets, any prior valuations and the name of the auditor. We agree the scope and timeline at the start, once we know whether intangibles are included.
Ready for a precise, independent valuation?
Connect with the Monita Asset Management team. All consultations are free of charge.
- Free initial consultation
- Fee confirmed before any work begins
- Certified Practising Valuer, Sydney CBD office