Purchase Price Allocation (ASC 805) Benchmarking Study IT 2018


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




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.



More Updates

Navigating SAFE Valuations

Neither “Safe” nor “Simple,” these Simple Agreements for Future Equity are convertible debt instruments that are often misunderstood and hard to value.

7 Areas to Transform Your Financial Reporting Valuation

Creating shareholder value is the goal of most for-profit entities, where value is viewed in a strictly financial sense.  In the world of startups and VCs, this means maximizing exit valuations. That exit valuation number is of fundamental importance. Exit valuations are built over time. Thus, tracking valuations is critical.  Companies have many opportunities to track their valuations, from upgraded

About Financial Forecast

A financial forecast is a centerpiece of many valuations.  It answers the principal question: “Why the business is valuable in the first place?”  In strategic analysis, financial forecast links business strategy and value.  In financial reporting, a financial forecast is a more refined, post-strategic-planning representation of a company’s expected financial performance. 

Schedule a Call

Most new projects will require a brief introductory conversation. Unless you are a returning client asking for an update to a old valuation, please use the calendar below to schedule a call with us:

Send a Message

We are located in the San Francisco Bay Area, while our clients cover much broader geography, from Southern California to the East Coast and Europe. Please contact us with questions and inquiries. Also, feel free to stop by on your way to the beautiful Sonoma or Napa Valley.

Schedule a Call