Purchase Price Allocation
Purchase Price Allocation (PPA)
The acquisition is done. Now the accounting starts - and this is where it gets complicated.
Under IAS 3, you cannot simply record an acquisition at the purchase price. Every identifiable asset and liability — including intangible assets that were never on the target’s balance sheet — must be measured at fair value. Get this wrong and you overstate or understate goodwill, distort amortisation charges for years, and face audit questions at the worst possible moment.
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What is Purchase Price Allocation (PPA)?
Acquiring a business is more than just completing a transaction. Once an acquisition is finalized, companies must determine how the purchase price should be allocated among the acquired assets and liabilities. This process, known as Purchase Price Allocation (PPA), is a critical requirement under IAS 3 Business Combinations and plays a significant role in financial reporting, investor transparency, audit compliance, and post-acquisition integration.
Under IAS 3, businesses cannot simply record an acquisition at the purchase price. Instead, they must identify and measure all acquired tangible and intangible assets separately from goodwill. The difference between the Purchase Consideration Paid and the Fair Value of Net Identifiable Assets Acquired is recorded as Goodwill.
At Valuation Arabia, we provide comprehensive PPA services in Dubai and across the UAE, helping businesses, investors, private equity firms, family offices, and multinational corporations accurately determine fair value.
Purchase Price Allocation at a Glance
Identify and measure acquired assets and liabilities at fair value, allocate the purchase consideration appropriately, and recognize any resulting goodwill in accordance with IFRS 3 Business Combinations.
− Fair Value of Net Identifiable Assets Acquired
= Goodwill
Our Purchase Price Allocation Process
Our structured process ensures IFRS compliance and delivers robust, audit-ready valuations.
Transaction Review
We thoroughly review acquisition documents, transaction structures, purchase agreements, and financial information.
Asset Identification
Our team identifies all tangible and intangible assets (like IP, software, customer lists) acquired as part of the transaction.
Fair Value Analysis
Appropriate IAS 13 valuation methodologies (Market, Income, or Cost Approach) are applied based on asset characteristics.
Goodwill Determination
Residual goodwill is calculated after meticulously assigning fair values to all identifiable assets and assumed liabilities.
Deferred Tax Assessment
We assess tax implications arising from fair value adjustments and identify deferred tax assets (DTA) or liabilities (DTL).
Reporting & Audit Support
A comprehensive audit-ready report is prepared, and we provide end-to-end support during auditor reviews.
Every Purchase Price Allocation (PPA) engagement is performed in accordance with IAS 3 and IAS 13, delivering an audit-ready valuation that supports financial reporting, investor confidence, and regulatory compliance.
Industry-Specific PPA Valuation Expertise
Dubai's dynamic investment environment requires highly specialized valuation. We support M&A transactions across various sectors:
Real Estate & Construction
Valuation of development projects, commercial properties, infrastructure assets, and long-term contracts.
Technology & Software
Valuation of proprietary software, SaaS platforms, customer databases, and Intellectual Property.
Healthcare
Valuation of hospital assets, medical equipment, patient relationships, healthcare brands, and licenses.
Manufacturing
Valuation of production facilities, heavy machinery, supply contracts, and operational assets.
Retail & Consumer Brands
Valuation of brand value, trade names, franchise rights, distribution networks, and customer loyalty assets.
Financial Services
Valuation of investment portfolios, client relationships, management contracts, and distribution agreements.
Frequently Asked Questions about PPA
Answers to common questions about Purchase Price Allocation, IFRS requirements, goodwill, valuation methodologies, and audit expectations.
Purchase Price Allocation is the process of assigning the acquisition price of a business to acquired assets and liabilities at fair value as required by IFRS 3.
Yes. Companies preparing financial statements under IFRS must perform a Purchase Price Allocation following qualifying business combinations.
The primary standards are IAS 3 (Business Combinations) and IAS 13 (Fair Value Measurement), alongside IAS 36 for subsequent impairment testing.
Assets commonly valued include real estate, machinery, brands, customer relationships, patents, software, licenses, contracts, and proprietary technology assets.
Goodwill equals the purchase consideration (the price paid for the acquisition) less the fair value of all identifiable net assets acquired.
IFRS requires identifiable intangible assets to be recognized separately from goodwill when they can be reliably measured, giving a clearer picture of the acquired company's value drivers.
Yes. Fair value adjustments can affect future depreciation, amortization of intangibles, impairment charges, and ultimately reported earnings.
In most significant acquisitions, auditors prefer or explicitly require independent valuation reports to support management's accounting treatment and fair value assumptions.
Speak with UAE Purchase Price Allocation Experts
Valuation Arabia helps businesses across Dubai and the UAE navigate complex acquisition accounting requirements through independent, IFRS-compliant Purchase Price Allocation services delivered by experienced valuation professionals.
