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Purchase Price Allocation (PPA) | Purchase Price Allocation

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Purchase Price Allocation (PPA) - more than 24 projects per year, each defended against the auditor

Closing a transaction is not the end of the job - it's often its most difficult stage on the accounting side. If you are acquiring an entity within an IFRS or US GAAP reporting group, you are required to perform a Purchase Price Allocation (PPA). Many buyers only discover this requirement when the auditor asks questions at year-end closing.

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What is the purchase price allocation (PPA)?


Purchase price allocation is a process required by IFRS 3 (Business Combinations) and ASC 805 (U.S. GAAP), performed after the acquisition of a business or asset. The process is usually performed after the closing of the transaction, prior to the preparation of the group's annual or interim financial statements.


It involves allocating the price paid to the identified assets, liabilities and contingent liabilities of the acquired entity at their fair value - and consequently determining the goodwill or gain on a bargain acquisition. In practice, PPA is a mandatory element of accounting for many M&A transactions and has a direct impact on the subsequent financial reporting of the group.


In practice, this means:


  • identification and valuation of intangible assets acquired in the transaction (brands, customer relationships, technologies, contracts, databases, proprietary software), which were often not on the seller's balance sheet at all before the acquisition,
  • measuring the fair value of tangibleassets, liabilities and contingent liabilities in accordance with IFRS 13,
  • determination of the fair value of the consideration transferred, including contingent elements such as earn-outs and contingent liabilities, if any, along with their classification as either financial liabilities or an equity component,
  • calculation and justification of goodwill or bargain purchase gain.

Why does a PPA require the support of an outside advisor?

Purchase price allocation (PPA) is one of the areas where auditors ask the most questions - and rightly so. The results of the allocation have a direct impact on the consolidated financial statements for many years: through amortization of identified intangible assets and potential goodwill impairment testing.


A misallocation is a risk of the report being challenged by the auditor, the need for adjustments and reclassifications, and, in the case of listed groups, also regulatory risks.


Aider Polska conducts the PPA from the valuation and accounting side - including taking over the discussion with the auditor on the calculation methodology and necessary disclosures in the consolidated report. We are familiar with auditors' expectations, because part of our team started their adventure in finance with auditing.

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Scope of transactions


We execute purchase price allocation (PPA) projects for both domestic and cross-border transactions - including non-European entities acquiring companies operating in the EU market. We have experience in valuing complex intangible assets, such as proprietary technology platforms, counterparty bases or relationships with distribution networks, which require industry expertise beyond standard valuation methodologies.

For whom do we implement PPA projects?

We support organizations that need to conduct a PPA after a business or asset acquisition.


  • IFRS or US GAAP reporting groups that have completed an acquisition,
  • Private equity funds and their portfolio companies post-closing,
  • Companies preparing for consolidation after investor entry,
  • Finance departments that need to account for the transaction and do not have sufficient internal resources,
  • Foreign capital groups acquiring Polish entities or assets.

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