Purchase Price Allocation (PPA) Valuation Services
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Valuation Experience
Valuations Completed
Industries Served
3-5 Days
What Is a Purchase Price Allocation Under ASC 805?
A purchase price allocation is the analysis performed after an acquisition to determine how transaction consideration should be assigned among the assets acquired and the liabilities assumed. Under ASC 805, Business Combinations, an acquirer generally recognizes identifiable acquired assets and assumed liabilities at their fair values as of the acquisition date, with the remainder recognized as goodwill.
The allocation is not a formality. The values assigned to customer relationships, developed technology, and trade names drive amortization expense, operating income, deferred tax balances, and every future impairment test. Thin support for forecasts, royalty rates, attrition assumptions, or discount rates is one of the most common reasons acquisition accounting gets sent back for rework during audit.
At Transaction Capital LLC, every purchase price allocation is prepared and reviewed by credentialed appraisers holding ASA®, ABV®, CVA®, and MRICS designations. Each report documents the methodology, assumptions, financial analysis, and supporting evidence behind the conclusions, so your accounting team and your auditors can follow the valuation trail from consideration transferred to residual goodwill.
Our Purchase Price Allocation Valuation Services
Transaction Capital LLC supports acquirers, CFOs, controllers, accounting firms, private equity firms, and transaction advisers across the full acquisition accounting cycle.
Get an Independent, Audit-Ready ASC 805 Purchase Price Allocation
What Does a Purchase Price Allocation Actually Allocate?
A PPA assigns the transaction consideration across every asset acquired and liability assumed, then recognizes whatever remains as goodwill. The allocation commonly covers the following categories.
| Allocation Category | Typically Includes |
|---|---|
| Financial Assets | Working capital and other financial assets |
| Inventory | Raw materials, work in process, and finished goods measured at fair value |
| Fixed Assets | Property, plant, and equipment |
| Customer-Related Intangibles | Customer relationships and customer contracts |
| Technology Intangibles | Developed technology, software, patents, and proprietary technology |
| Marketing Intangibles | Trademarks and trade names |
| Contract-Based Intangibles | Contracts and licensing rights |
| Restrictive Covenants | Non-compete agreements |
| Other Identifiable Intangibles | Asset classes specific to the industry or transaction |
| Assumed Liabilities | Debt, accruals, and other obligations transferred at closing |
| Contingent Consideration | Earnouts and milestone payments measured at acquisition-date fair value |
| Deferred Taxes | Book-to-tax basis differences created by the combination |
| Goodwill | The residual after identifiable net assets are recognized |
How Is Transaction Consideration Determined in a PPA?
Every allocation starts with the consideration transferred and getting that number right is the foundation of the entire analysis. We review the transaction structure and the supporting deal documents, including the purchase agreement, closing statement, financial statements, forecasts, capitalization information, and related closing materials.
| Form of Consideration | Valuation Consideration |
|---|---|
| Cash Consideration | Measured at the amount transferred at closing |
| Equity Consideration | Acquirer shares measured at acquisition-date fair value |
| Seller Notes | Present value based on stated terms and market yields |
| Rollover Equity | Value of the retained interest in the combined business |
| Earnouts | Probability-weighted or option-based fair value measurement |
| Milestone Payments | Scenario modeling around defined performance or approval events |
| Contingent Consideration | Fair value at the acquisition date where required |
| Other Contractual Consideration | Deal-specific arrangements reviewed against the agreement terms |
One point first-time acquirers often get wrong: transaction costs such as legal fees, advisory fees, and diligence expenses are not part of the consideration transferred. Under ASC 805 they are expensed as incurred rather than capitalized into the deal, so they never enter the allocation or the goodwill calculation.
How Are Acquired Assets and Liabilities Identified in a PPA?
We identify the assets acquired and liabilities assumed that may require recognition separately from goodwill. The mix of identifiable assets varies significantly by company and by industry.
- Customer-Related Intangible Assets - Customer relationships, customer contracts, customer lists, order backlog, subscriber relationships, and distributor relationships.
- Technology-Related Intangible Assets -Developed software, proprietary technology, patented technology, unpatented technology, trade secrets, databases, algorithms, and technical know-how.
- A Note for Private Company Acquirers - Eligible private companies may simplify recognition of certain customer-related intangibles and non-compete agreements under ASU 2014-18, subject to the related goodwill accounting election.
- Contract-Based Intangible Assets - Licensing agreements, franchise agreements, supply agreements, distribution agreements, favorable contracts, and certain lease-related rights.
- Other Assets and Obligations - Depending on the transaction, the allocation may also address inventory, property and equipment, real estate, non-compete agreements, contingent assets or liabilities, and assumed debt or other obligations.
- Marketing-Related Intangible Assets - ETrademarks, trade names, brands, domain names, and service marks.
Purchase Price Allocation Valuation Methods We Use
Different assets require different methods. Transaction Capital LLC applies recognized valuation techniques selected around the economic characteristics of each asset, then documents why the chosen method fits.
| Method | Commonly Applied To | What Drives the Conclusion |
|---|---|---|
| Multi-Period Excess Earnings (MPEEM) | Customer relationships and other primary income-generating intangibles | Forecast earnings, attrition, contributory asset charges, economic life, discount rate |
| Relief-from-Royalty | Trademarks, trade names, brands, software, technology, and patents | Hypothetical royalty savings from owning rather than licensing the asset |
| With-and-Without | Non-compete agreements, contracts, licenses, and similar rights | Difference between expected cash flows with and without the subject asset |
| Distributor Method | Customer relationships in distribution-weighted businesses | Economic return attributable to the customer function using distributor margins |
| Greenfield Method | Licenses, permits, franchises, and contractual rights | Value of the business assuming all other required assets must be built from scratch |
| Cost Approach | Software, databases, internal systems, technology, and tangible assets | Replacement or reproduction cost adjusted for obsolescence |
| Market Approach | Corroboration across most asset classes | Comparable transactions, licensing arrangements, and other market evidence |
| Option-Pricing and Simulation | Contingent consideration, earnouts, and milestone payments | Probability distributions around uncertain future outcomes |
How Goodwill Is Determined in a Purchase Price Allocation
Goodwill is generally the residual amount arising after the transaction consideration is compared with the fair value of the identifiable net assets recognized in the acquisition. Economically, it often reflects expected synergies, going-concern value, future customer growth, market position, assembled workforce, operating efficiencies, and the strategic benefits of the acquisition.
Goodwill is not an arbitrary balancing figure. A credible PPA provides a logical reconciliation between the purchase price, the identifiable assets, the liabilities assumed, and the resulting goodwill. If that bridge cannot be explained, the allocation will not survive review.
In the less common case where the fair value of the identifiable net assets exceeds the consideration transferred, the acquirer reassesses the identification and measurement of the acquired items before recognizing a bargain purchase gain. That reassessment step is itself part of a defensible allocation.
Pre-Acquisition Purchase Price Allocation Analysis
A purchase price allocation does not always have to begin after closing. Transaction Capital LLC also assists with preliminary allocation analysis so management can understand the financial reporting consequences of a proposed acquisition before the deal is signed.
A preliminary PPA helps assess expected goodwill, expected intangible asset values, future amortization expense, potential earnings impact, contingent consideration, deferred tax considerations, and the key valuation assumptions that will drive the final allocation.
When is an ASC 805 Purchase Price Allocation Required?
A PPA is generally required when a transaction is accounted for as a business combination under US GAAP. These are the situations that most often trigger the analysis.
| Transaction Trigger | Why the Allocation Is Needed |
|---|---|
| Acquisition of a Private Company | Opening balance sheet must reflect acquisition-date fair values |
| Acquisition of a Subsidiary or Business Unit | Carve-out assets and liabilities require separate measurement |
| Private Equity Acquisitions | Platform and add-on deals need allocation for portfolio reporting |
| Strategic Corporate Acquisitions | Synergy-driven pricing must be reconciled to identifiable assets |
| Technology and SaaS Acquisitions | Developed software and subscriber relationships dominate value |
| Healthcare and Professional Services Deals | Payer contracts, referral bases, and non-competes require analysis |
| Cross-Border Acquisitions | Local statutory reporting may run alongside US GAAP |
| Deals With Earnouts or Contingent Consideration | Contingent payments must be measured at fair value at closing |
| Acquisitions Involving Significant IP | Patents, trade secrets, and brands need individual valuation |
| Opening Balance-Sheet Adjustments | Inventory, fixed assets, and liabilities are stepped to fair value |
Not Sure What Your Deal Requires for PPA?
Who Needs a Purchase Price Allocation Valuation?
Acquirers and Corporate Development Teams
CFOs and Controllers
Private Equity Firms
Accounting Firms and CPAs
Transaction Advisers and Investment Banks
External Auditors
Boards and Audit Committees
Tax Advisers
Book PPA vs. Tax Purchase Price Allocation
A financial reporting PPA under ASC 805 should not be treated as the same exercise as a tax purchase price allocation. For financial reporting, the primary measurement basis is generally fair value. For certain taxable asset acquisitions, purchase consideration may separately need to be allocated for tax purposes under IRC Section 1060, including reporting through IRS Form 8594, which the buyer and the seller each file and which are generally expected to be consistent with one another. Section 1060 allocates across seven statutory asset classes rather than the economic categories used for financial reporting.
| Point of Difference | Why Book and Tax Conclusions Can Diverge |
|---|---|
| Standard of Value | Fair value for reporting; fair market value concepts for tax |
| Contingent Consideration | Treated differently under the two frameworks |
| Deferred Taxes | Recognized for reporting; not an allocation item for tax |
| Tax Basis | Tax allocation establishes basis; book allocation does not |
| Tax Amortization Benefits | May be reflected in fair value but not in the tax allocation itself |
| Goodwill Allocation | Residual mechanics and asset classes differ |
| Bargain Purchase Treatment | Handled separately under each framework |
| Asset Classification | Statutory asset classes apply for tax reporting |
A single transaction may therefore require both a financial reporting allocation and a separate tax allocation, depending on how it is structured.
IRC Section 338 Transactions
Certain stock acquisitions may be treated as asset acquisitions for US federal income tax purposes through elections under IRC Section 338, subject to the applicable requirements. Where such an election applies, valuation may be required to establish the fair market values used in allocating tax basis among the acquired assets. This tax allocation is distinct from, although often closely related to, the ASC 805 financial reporting PPA.
Deferred Tax Considerations
Business combinations frequently create differences between the book basis and the tax basis of acquired assets. Where material, those differences can create deferred tax assets or deferred tax liabilities, and the deferred tax adjustment can change the amount of goodwill ultimately recognized. Coordination between the valuation specialist, management, the tax adviser, and the accounting team matters most when significant intangible assets are being recognized.
Benefits of an Independent Purchase Price Allocation
Get Your Purchase Price Allocation
Right from the Start with Transaction Capital LLC.
Get an independent, audit-ready ASC 805 valuation with clear support for acquired assets,
liabilities, intangible assets, and goodwill.
How Our Purchase Price Allocation Process Works
Standard engagements are delivered within 3 to 5 business days following receipt of the required documents.
Free Consultation
Discuss the transaction structure, reporting deadline, and audit timeline, then receive a transparent flat-fee quote.
Document Collection
Securely share the required deal documents and financial information using a tailored document checklist.
Analysis and Modeling
We identify acquired assets, select appropriate valuation methods, build the required models, and test key assumptions against market evidence.
Draft Report Review
Review the complete draft report, including the valuation methods, key assumptions, calculations, and goodwill reconciliation.
Final Report & Support
Receive the signed final valuation report, with reasonable support for valuation-related questions raised during external auditor review.
What Information Is Required for a Purchase Price Allocation?
We normally request the following. Additional information may be requested depending on the transaction and the assets identified.
- Transaction Documents - Purchase agreement, closing statement, acquisition date, and consideration details.
- Financial Information - Historical financial statements and closing balance sheet.
- Forward-Looking Data - Management forecasts and supporting assumptions.
- Asset Detail - Fixed asset register, inventory detail, and real estate information.
- Customer Data -Revenue by customer, attrition and retention history, and backlog.
- Technology and IP - Development records, patent and trademark filings, and product roadmap.
- Contracts - Material customer, supplier, license, and non-compete agreements.
- Earnout Terms - Milestone definitions, measurement periods, caps, and payment mechanics.
- Tax Materials -Relevant tax and transaction documents affecting basis and structure.
What Your Purchase Price Allocation Report Includes
- Executive Summary - Allocation conclusions, acquisition date, and engagement scope.
- Transaction and Company Overview - Deal structure, consideration transferred, and business profile.
- Consideration Analysis - Cash, equity, notes, rollover, and contingent components measured and reconciled.
- Identified Asset Schedule -Every asset recognized separately from goodwill, with the basis for recognition.
- Valuation Methodology - The method selected for each asset and the reasoning behind the selection.
- Financial Analysis and Forecasts - Historical review, normalization adjustments, and risk-adjusted projections.
- Market Evidence - Royalty benchmarks, comparable transactions, and licensing data where applicable.
- Contributory Asset Charges - Transparent schedules isolating excess earnings under MPEEM.
- Discount Rate Development - WACC build-up and asset-specific rate reconciliation.
- Useful-Life Conclusions - Supporting analysis for each finite-lived asset.
- WARA Reconciliation - Weighted Average Return on Assets check confirming the blended asset return is consistent with the deal IRR and WACC.
- Goodwill Reconciliation - The bridge from purchase price to identifiable net assets to residual goodwill.
- Standards and Certification - Compliance statements and appraiser certification with supporting schedules.
Purchase Price Allocation Auditor Review Support
Revenue Forecasts
Customer Attrition Rates
Royalty Rates
Discount Rates
Contributory Asset Charges
Useful Lives
Technology Obsolescence
Earnout Assumptions
WARA Reasonableness Check
Goodwill Reconciliation
ASC 805 Purchase Price Allocation Compliance Standards
Reports are prepared using recognized valuation principles and the professional standards applicable to the nature and purpose of the engagement.
ASC 805
ASC 820
ASC 350 / ASC 360
IFRS 3
USPAP
AICPA SSVS No. 1 (VS Section 100)
NACVA Standards
IVS
IRC Section 1060
IRC Section 338
IRC Section 197
ASC 740
Not every standard applies to every engagement. The applicable framework depends on the transaction, the reporting entity, and the purpose of the valuation.
Insights From Real Valuation Engagements
2,500+ Valuations. 50+ Industries. Deep Expertise in Each.
Acquisition accounting looks different in every sector, because the assets that carry the value are different.
Why Choose Transaction Capital LLC for PPA Valuation?
Institutional-quality rigor with boutique responsiveness and direct access to the appraiser who signs your report.
| Capability | Transaction Capital LLC | Large National Firms | Automated Platforms |
|---|---|---|---|
| Credentials | ABV, ASA, CVA, MRICS | Credentialed, high cost | No appraiser sign-off |
| Turnaround | 3-5 Business Days | Several weeks | 24-72 hours |
| Contingent Consideration | Included in scope | Included, priced separately | Generally not covered |
| Useful-Life Analysis | Included | Included | Limited |
| Pay After Draft Review | ✓ Yes | ✗ No | ✗ No |
| Auditor Q&A Support | ✓ Included | Often billed separately | Not offered |
| Direct Appraiser Access | ✓ Yes | Varies by engagement | No |
Credentialed Sign-Off
Deep Financial Reporting Experience
Transparent Flat-Fee Pricing
Pay After Draft Review
Post-Report Support
Elite Leadership
Review Your PPA Before You Pay
Receive a complete draft of your ASC 805 purchase price allocation and review the methodology, assumptions, and goodwill reconciliation before payment is due.
Trusted by CFOs, Auditors, and Deal Teams
Transaction Capital LLC also provides post-valuation IRS audit support - assisting clients and their attorneys through examinations, Tax Court proceedings, and estate dispute resolution at no additional charge.
CFOs and Controllers
Closes acquisition accounting with documented, reconcilable conclusionsExternal Audit Teams
Transparent schedules and assumption support that shorten review cyclesPrivate Equity Sponsors
Consistent allocation methodology across platform and add-on deals
Tax Advisers
Fair market value analysis coordinated with Section 1060 and Section 338 workBoards and Audit Committees
Independent conclusions supporting oversight responsibilities
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Join thousands of families, business owners, and estate professionals who rely on Transaction Capital LLC for gift and estate tax valuations that hold up when it matters most - in IRS examinations, in court, and in front of the attorneys reviewing your plan.
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Transaction Capital LLC is rated on G2, Trustpilot, and Clutch by founders, CFOs, estate attorneys, and legal professionals across the United States.
Transaction Capital LLC delivered a high-quality Fair Market Value (FMV) analysis with exceptional responsiveness, professionalism, and depth. The team communicated clearly throughout the process and provided strong transparency around their methodology, allowing stakeholders to understand not just the conclusions, but the rationale behind them.
The work delivered by TXN Capital LLC on the IVS 105 valuation for our deeptech startup demonstrates great quality. Their clarity in documenting assumptions and methodologies ensures transparency and ease of understanding.
Working with Gaurav at Transaction Capital LLC for our 409A valuation was seamless and professional. He delivered a thorough, defensible report quickly and explained every detail clearly. Highly recommend for any startup seeking a reliable and efficient valuation partner.
Transaction Capital LLC, led by Dr. Gaurav, is truly the best in the business valuation space. I’ve seen the results firsthand — working with anyone else would be a waste of money. Believe me, they are the best.
Gaurav is very knowledgable in his field and was super helpful in his response and explanations. He finished the contract well before the deadline! Highly recommended. Thanks Gaurav
We got the Financial Model made by Gaurav which included all the standard things. Gaurav was helpful in explaining all the complex lingos and make it simple for us to understand. Strongly recommend him for getting FM made
Purchase Price Allocation Services Across the United States
Transaction Capital LLC provides independent purchase price allocation valuation services across all 50 US states. Headquartered in New York, with active engagements nationwide.
