Business combination accounting that holds up after the deal closes.

When your company buys another business, the deal does not just move cash and shares. It reshapes your balance sheet. Business combination accounting is the set of rules that decides how the acquisition shows up in your financial statements — what you record, at what value, and where the difference between price and net assets goes. In the United States the governing standard is ASC 805; internationally it is IFRS 3. Both apply what accountants call the acquisition method.

The core exercise is a purchase price allocation. You paid a number for the target. That number rarely matches the book value of what you acquired, because you bought a running business with contracts, brand, technology, and a customer base that a balance sheet never fully captured. The allocation takes the total consideration and spreads it across every identifiable asset and liability at fair value on the acquisition date. Whatever you paid above the fair value of those net identifiable assets lands in goodwill.

That sounds mechanical, but the judgment is real. Which intangible assets exist and can be separated from goodwill? What is a customer relationship actually worth over its remaining life? How do you value an earnout that pays only if the target hits revenue targets? Get these wrong and your post-close earnings, your amortization, and your future impairment tests all inherit the mistake. We build the allocation so the numbers are defensible the day your auditor asks how you arrived at each one.

You need a purchase price allocation whenever you acquire control of a business, and you need it fast. Under ASC 805 the acquisition goes on your books in the period the deal closes, so the allocation cannot wait until you feel ready. The people who push for it are predictable, and they usually arrive in this order.

• Your auditor. The financial statements for the year of the acquisition have to reflect the deal correctly. Your external auditor will test the consideration, the fair values, the intangibles you recognized, and the goodwill you booked. A thin or late allocation turns into an audit finding.
• Your CFO and controller, right after close. The finance team has to run the acquired business through the monthly close, and they cannot do that until they know the opening balances, the intangible amortization schedules, and the deferred tax entries the deal created.
• Your private equity sponsor. PE-backed acquirers report to a fund that watches how each add-on affects portfolio-level EBITDA and leverage. Sponsors expect a clean allocation because it feeds the reporting they send their own limited partners.
• Your lenders and future buyers. Anyone underwriting your debt or diligencing your company later reads the acquisition accounting to understand what you really bought and how the goodwill sitting on your books came to be.

The measurement period gives you up to 12 months after close to finalize provisional numbers as better information arrives, but that window is for refinement, not for starting late. The earlier we begin, the more the allocation reflects real diligence data rather than rushed estimates.

You receive a complete purchase price allocation package. That means a technical accounting memo that walks through the acquirer determination, the consideration measurement, and the recognition decisions; a valuation model supporting each intangible asset with its useful life and amortization schedule; the goodwill calculation with the deferred tax bridge; and the journal entries your team posts to record the deal. Everything ties to the total consideration, and every judgment carries a reason a reviewer can test.

Intangibles usually carry the most weight. Customer relationships are often valued with a multi-period excess earnings method that models the cash the acquired customers will generate net of the assets that support them. Developed technology and trademarks frequently use a relief-from-royalty approach, estimating what you would pay to license the asset if you did not own it. Noncompete agreements get valued on the difference in cash flows with and without the agreement in place. We pick the method the asset and the standard call for, not the one that is fastest.

Timing depends on deal size and how clean the diligence data is. A focused allocation for a single-product acquisition can be ready in a few weeks. A carve-out with multiple product lines, earnouts, and cross-border entities takes longer. Because ASC 805 allows a measurement period of up to 12 months, we can issue defensible provisional numbers for your close and refine them as final diligence figures land, so your reporting is never held hostage to the last data point.

Plenty of firms will hand you a valuation model. Fewer bring a licensed CPA who understands how that model has to behave once it lives inside your audited financial statements. That distinction matters. A purchase price allocation is not a standalone appraisal; it is the opening chapter of every post-close period you will report. When the auditor questions a customer-relationship life or a deferred tax entry, you want the people who built the number to answer, not a valuation specialist who has already moved on.

Our work pairs naturally with the quality of earnings analysis that shaped your deal. The normalized EBITDA and working capital insights from diligence feed directly into the fair value estimates, so your accounting reflects the same economic story your investment thesis did. You get senior CPA attention that stays on the file through audit, fixed scope you can budget around, and a model your controller can actually maintain — updating amortization and running impairment tests without calling us every quarter.