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Purchase Price Allocation (ASC 805) Benchmarking Study IT 2018

November 4, 2019
Max Fonarev

We are pleased to present the results of our purchase price allocations benchmarking study for Information Technology acquisitions completed in 2018.

FULL REPORT

While no two acquisitions are the same, common themes in the valuation of intangibles and goodwill can be found along industry lines. Information Technology companies commonly rely on such identifiable intangible assets as developed technology, in-process research and development, customer relationships, and trade names. However, even within IT, companies pursue wildly different and unique business models. Our analysis aims to identify patterns within narrowly defined industry segments.

Key highlights include:

♦ 134 transactions selected and analyzed,

♦ Most goodwill is booked in Software acquisitions, a median of 65% of total assets acquired and 68% of excess consideration (intangibles + goodwill),

♦ Most value attributed to technology was found in Hardware and Semiconductor acquisitions, medians of 19% and 18%, respectively, of total assets, acquired. Respective useful lives were 7.4 years and 8.9 years.

♦ IT Consulting and Outsourcing industry had the highest proportion of total assets allocated to customer relationships, 31%, and median useful live of 10 years,

♦ Trade Name was the only other intangible that was observed in every sub-industry. Backlog, Non-Complete Agreements, and In-Process R&D were observed less frequently.

You can see the full report here.

FULL REPORT

ASC 805, ASC 805 Purchase Accounting, Fair Value, Financial Reporting, Intangible Asset Valuation, IP Valuation, Purchase Accounting, Purchase Price Allocation, Transactions

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