Purchase Price Allocation (PPA)

PPA stands for Purchase Price Allocation. It refers to the procedure of allocating the acquisition cost paid in an M&A transaction to the assets and liabilities of the acquired company.

Assets and liabilities subject to PPA include not only those recorded on the balance sheet but also intangible assets such as trademarks and customer lists. Since the allocation amounts affect future depreciation and amortization expenses, it is critical to quickly reflect the PPA results in future business plans. However, PPA must be completed within one year of the business combination, and discussions with the financial auditor often require a substantial amount of time.

As a result, we often hear of cases where future business plans cannot be formulated because the PPA is pending, or where plans must be completely revised once the PPA results are finalized.

Leveraging our past experience and working collaboratively with real estate appraisers and lawyers, our group strives to finalize PPA results as rapidly as possible.