The acquisition spread is defined as the difference between a company’s share purchase price and its net book value. It first appears when the target company’s accounts are consolidated with the acquirer’s.

Accounting standards state that the computed difference must allocated between the identifiable assets and the liabilities of the acquired company. This allocation generally concerns intangible assets (leasing rights, brand, patents, customer relationships, etc.), tangible assets (land, Property, Plant, and Equipment, etc.), and financial assets. The residual amount neither belonging to identifiable assets nor identifiable liabilities is accounted for as goodwill.

Consequently, PPA requires an extensive understanding of how to value all types of assets and liabilities. It also impels a deep knowledge of various accounting standards (French Accounting Standards, US GAAP, IFRS), especially considering how each of these standards differ in their methods for valuing accounting goodwill, their amortization conditions and their impairment testing requirements.

Our scope of expertise covers the first consolidation of accounts post-acquisition, pre-acquisition analysis, and the periodical monitoring of asset value through impairment testing.


The methods we’ve developed to successfully execute PPA missions in cases of first consolidation rely on the following principles:

Les méthodes que nous avons développées pour réaliser les missions d’affectation de l’écart de première consolidation tiennent compte de trois dimensions complémentaires :

  • A comprehensive understanding of all accounting rules and standards, including all existing or forthcoming supplementary texts
  • An in-depth analysis of all PPA components and their individual contribution to the value of the business
  • A strict adherence to the principles of financial valuation (computational techniques, selection of parameters, etc.).

Our expertise covers the valuation of all types of assets or liabilities in any line of business or industry. In some cases, however, we may resort to the services of an external partner that we judge will add further insights to our analyses (real estate experts to value commercial leases, land, or property; technical experts to assist in the valuation of patents, etc.)


Our Work

Upon completion of our mission, we will deliver a thoroughly documented report detailing the entities to which the estimated spread will be allocated (according to the Cash Generating Units – CGUs), the nature of the assets that have to be valued (or revalued), the method of choice adopted, and the results obtained.

For impairment testing, we supply a similarly documented report discussing the audited accounts monitored and that appear on the balance sheet.

In both cases, we offer you our assistance in your discussions with your auditors.