Why is Purchase Price Allocation (PPA) Important?

Business combinations are infrequent and unique transactions, requiring accurate financial treatment. According to IFRS 3 (Business Combinations), the identifiable assets acquired and liabilities assumed in a business combination must be measured at their acquisition-date fair values. Estimating fair values often requires specialized expertise and the use of valuation techniques, making the process complex.

In line with IFRS 13 (Fair Value Measurement), entities must use valuation techniques consistent with one or more of the following approaches to determine fair value:

• Market Approach: Benchmarks against similar assets or transactions in the market.
• Income Approach: Estimates the present value of expected future cash flows.
• Cost Approach: Calculates the cost to replace or reproduce an asset, adjusting for age or obsolescence.

Middle Eastern Relevance

With the Middle East experiencing significant M&A activity in industries like oil & gas, technology, construction, and healthcare, PPA is crucial to ensure:

• Compliance with IFRS standards.
• ccurate reporting of goodwill and intangible assets.
• Investor confidence and tax efficiency.

Initiatives like Saudi Vision 2030 and GCC’s economic diversification plans have further accelerated the need for precise and compliant PPA services in the region.

How We Can Help

We provide end-to-end Purchase Price Allocation (PPA) services tailored to meet your business combination’s unique needs. Our offerings include:

• Fair Value Estimation:
  • Accurate measurement of tangible and intangible assets using methodologies consistent with IFRS 13.
  • Specialized expertise in complex asset valuations relevant to the Middle East, such as oil reserves, intellectual property, and customer relationships.
• Tangible and Intangible Asset Valuation:
  • Tangible Assets: Real estate, machinery, equipment, and infrastructure.
  • Intangible Assets: Patents, trademarks, brand equity, customer relationships, and technology assets.
• Goodwill Calculation and Management:
  • Determining residual goodwill to reflect synergies.
  • Providing ongoing goodwill impairment testing to comply with financial reporting requirements.
• Tax and Deferred Liability Management:
  • Addressing fair value discrepancies to optimize deferred tax implications and align with GCC’s evolving tax landscape, including VAT and corporate tax.
• Comprehensive Reporting and Audit Support:
  • Delivering audit-ready reports with detailed documentation of methodologies and assumptions.
  • Assisting in seamless integration of PPA into your financial statements.

Why Choose Us?

• Regional Expertise: Deep understanding of Middle Eastern industries and market dynamics ensures tailored solutions for your acquisitions.
• Global Compliance: Adherence to international accounting standards (IFRS 3 and IFRS 13) for seamless reporting.
• End-to-End Support: From initial fair value estimation to auditor coordination, we handle every step of the PPA process.
• Sector-Specific Solutions: Specialized services for industries like energy, technology, healthcare, and real estate.

Contact Us

Ensure accurate and compliant Purchase Price Allocation for your business combination. Contact us today to discuss how our PPA services can support your acquisition needs in the Middle East.