The Purchase Price Allocation
Analyze Early to Avoid Future Earnings Surprises

In mergers and acquisitions (M&A), the purchase price allocation (PPA) process is often treated as an afterthought. Because of the inherent complexity of the process, companies new to M&A often have an understandable desire to delay a PPA until after a deal has been made. But incorporating a PPA into M&A procedures in the early stages can provide the acquiring company an opportunity to integrate financial reporting with strategic considerations.

In the PPA process, an acquirer needs to be able to walk the valuation appraisers and auditors through the deal from start to finish. Early valuation involvement is likely to produce more consistency between due diligence expectations and post-closing realities – putting buyer, appraiser, and audit teams on the same level of understanding, minimizing post-deal accounting surprises, and getting the financial reporting of an acquisition off to a good start.

This article from Crowe Horwath LLP provides an overview of the PPA process and explains why taking a more strategic approach can help guide deals to more predictable conclusions. The article also covers:

• Why the PPA process benefits from a regimented structure
• How industry standard setters want to alter the process
• What questions acquirers should answer before a PPA audit

Crowe professionals are experienced with the challenges of the purchase price allocation process and how incorporating it into the early stages of a merger or acquisition can add value to the deal.

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