Eubank Capital

Purchase Price Allocations

ASC 805 allocations and financial-reporting valuations, built to hold up under audit review.

 

ASC 805 Purchase Price Allocation - Eubank Capital

The situation

When a client closes an acquisition, the valuation work has to hold up

An ASC 805 purchase price allocation touches nearly every line of the post-acquisition balance sheet. Goodwill, identifiable intangible assets, tangible asset adjustments, deferred tax liabilities, and noncontrolling interests each call for defensible valuation work that withstands audit scrutiny. For an audit team, the specialist behind that work matters. The wrong choice means rework, delays, and difficult conversations with the client. The right choice means a clean deliverable, methodology documented the way reviewers need to see it, and a valuation professional who understands what an auditor is looking for.

What Eubank Capital delivers in a PPA engagement

Every ASC 805 engagement produces a complete allocation supported by detailed methodology documentation. A typical engagement covers the following:

Consideration and deal structure.
Mapping the full transaction structure, including cash, seller notes, earnouts, noncontrolling interests, and any non-standard components of the deal.
Intangible asset identification and valuation.
Scoping the identifiable intangible assets under ASC 805 and valuing each with the appropriate method, including multi-period excess earnings for customer relationships and relief-from-royalty for trade names and technology. Contributory assets such as assembled workforce are valued by the cost approach to support the analysis, with other methods applied as the asset profile requires.
Tangible asset adjustments.
Fair value adjustments to property, plant, and equipment using the cost approach, with appropriate price indices, useful-life analysis, and functional and economic obsolescence considerations.
Working capital and net asset analysis.
Evaluating whether book values approximate fair value or call for adjustment, including inventory step-up analysis where applicable.
Discount rate development.
Weighted average cost of capital and asset-specific return calculations using a build-up approach with market-supported inputs.
Discount for lack of control and lack of marketability.
When the acquired interest is less than 100 percent, rigorous analysis of DLOC and DLOM supported by empirical data and the specific terms of the governing documents.
Goodwill and IRC §1060 tax allocation.
Residual goodwill determination and, where applicable, the tax allocation required under the Internal Revenue Code.
Deferred tax liability calculations.
Computing the deferred tax liability that arises from the book and tax basis differences created by the allocation.

The final deliverable is a comprehensive valuation report with a calculation letter that documents every methodology, input, and conclusion, ready for the audit file.

Built for complex transactions

Eubank Capital has performed ASC 805 allocations across a range of deal structures and industries, including multi-entity acquisitions involving four or more businesses acquired at once, each requiring its own independent allocation. Recent engagement experience includes multi-entity private-equity acquisitions with complex operating-agreement structures; transactions with significant identified intangible assets across multiple asset classes; acquisitions of both minority and majority interests requiring detailed discount analysis; engagements spanning fourteen or more exhibit schedules with full workpaper documentation; and purchase prices ranging from single-digit millions to the mid-eight figures.

This is not a sideline. Purchase price allocation work requires deep fluency in ASC 805, in the income and cost approaches to asset valuation, and in the documentation standards audit teams rely on. That is what Eubank Capital delivers.

What audit teams can expect

  • Defined scope and timeline up front
    Before work begins, the entity list, exhibit requirements, and delivery schedule are agreed. No surprises mid-engagement.
  • Direct access to the valuation professional leading the engagement
    Questions are answered by someone close to the analysis, not routed through layers of handoff.
  • Audit-ready documentation
    Every conclusion is supported by a calculation letter that lays out the methodology, key inputs, and analytical basis, so a review team can evaluate the work without a follow-up call.
  • Responsiveness during fieldwork
    When questions come up during review, they are answered promptly and in writing. Eubank Capital understands the timeline pressure an audit runs under.