If you are about to purchase a firm, an understanding of the purchase price allocation process is essential.
This is true whether you are a first-time purchaser or if you represent a private equity firm and are an experienced purchaser.
A purchase price allocation values the tangible and intangible assets of an acquired firm. These include such tangible assets as real estate, leases and inventory and such intangibles as brand value and customer and vendor relationships.
The tax implications of failing to obtain a solid purchase price allocation can be significant.