Assessing projects, backing up decisions.
In the case of numerous transactions such as acquisition or sale of companies, structural measures under company law, valuation of shares or division of the estate, the value of a company plays an important part.
Our expertise concerning the determination of company values comprises, besides the fundamental business management knowledge from the areas of cost accounting and performance accounting, controlling, investment and financing, also a specific understanding of the sector and of the market environment.
Whether for the business valuation within the scope of squeeze-outs and mergers or in the case of decisions by fairness opinions: the PKF valuation experts support you efficiently with the implementation of your entrepreneurial objectives.
The role of the valuer depends as a matter of principle on the respective valuation situation. For example, for the determination of objectivised company values, a neutral expert occupies himself with the valuation. In the case of disputes in and out of court the valuer takes on the role of the arbitrator.
Our services in detail:
As a rule various parties, often with different interests, are involved in strategic corporate decisions. With the transparent and realistic deduction of the company value, the basis for the bringing together of the interests is provided. In many cases the business valuation is also legally prescribed.
Our team of specialised finance experts provides help, on the basis of a well-founded understanding of the individual basic conditions of the item being valued, with the correct and/or necessary valuation. For this purpose, among other things, the relevant opportunities and risks are identified and a realistic deduction of the company value is carried out.
A significant role regarding the result of the valuation is played by the cost of capital as well as the earnings level forecast as being sustainable for the future. Since no company is identical to another, our experts strictly ensure a determination tailor-made for the company.
The impairment test is a check on the intrinsic value of the company which as a general rule is carried out at least once a year. What is tested is – following acquisition of a company, within the scope of the purchase price allocation on the consolidated balance sheet – goodwill and certain identified and valued intangible assets.
The impairment test is carried out according to a complex methodology that necessitates specialised know-how. Moreover, strict accounting standards apply to implementation. Our employees lend you competent and committed support.
After the acquisition of the company has already aroused the interest of the capital market, the results of the annual impairment test are received with excitement above all in times of economic and financial crisis. We see it as our task to ensure that you are adequately prepared in good time and therefore recommend that the impairment test should be set up as a permanently installed process in the accounting system.
The advisory services provided by our valuation experts are:
- Implementation of the process for the impairment test
- Carrying out of the annual impairment test determining the relevant valuation parameters such as capital costs
- Scenario analyses upon the change of major parameters
- Plausibility check on the financial planning underlying the impairment test
Purchase Price Allocation
International and national accounting make it necessary in the case of the acquisition of a company or also for mergers of companies to allocate the purchase price to the assets and debts acquired. This allocation becomes due as of the point in time of the first-time inclusion in the consolidated financial statements.
In particular intangible assets, such as customer relations, patents, trademarks etc. can considerably increase the value of the company acquired. Identifying these assets so far not shown on the balance sheet and valuing them at the market value is a particular organisational and technical challenge for which our experts support you competently. We handle, among other things, the detailed analysis of the underlying business model.
The values and parameters determined within the scope of the purchase price allocation (PPA), e.g. useful life and the residual value of goodwill can have major effects on the future financial position and results of operations of the company preparing the balance sheet. At the same time, purchase price allocation provides the opportunity to compare the advantages of acquisition with other transactions.
Due to the financial significance it is advisable to mesh the purchase price allocation closely with the financial due diligence during the acquisition process.
Here you can rely on our comprehensive expertise, many years of experience and our specialised expert knowledge.
Capital market relevance
Corporate acquisitions are particularly focused on by investors, banks or also regulatory bodies. Therefore a purchase price allocation must be carried out and documented completely in accordance with the accounting standards.
It is recommended that an expert third party should be involved for implementation and an expert opinion.
The PKF experts assist you with:
- Implementation of the purchase price allocation and documentation by means of expert opinions
- Analysis of financial impact on the company preparing the balance sheet already before acquisition of the company
- Discussion of the results of the PPA with the annual auditor
- PPA accounting (push-down)
With an increasingly complex economic and legal environment the liability risks in the case of entrepreneurial decisions also increase. For example, members of the managing board of a stock corporation are obliged to make their entrepreneurial decision on the basis of appropriate information to the benefit of the company (Business Judgement Rule, Art. 93, paragraph 1 of the German Stock Corporation Act (AktG)). This shall also apply to the Supervisory Board as well as to the decision-makers of companies of other legal forms.
However, the decision-makers often do not have enough information to assess the financial appropriateness. This gap can be filled by the fairness opinion of an independent, third-party expert. In that way the impression of a decision guided by subjective interests can be avoided.
Finally the fairness opinion forms an essential building block as regards the necessary documentation of the decision-making process.
A fairness opinion can only yield the desired benefit if, with regard to the way of proceeding, the assessment and valuation methodology, comprehensibility and reporting, it is prepared in the most highly qualified way. The draft of the professional standard "Principles for the Preparation of Fairness Opinions" (IDW S6) is to be taken into account.
PKF's corporate finance specialists provide support in all fields of application related to fairness opinion:
- Public acquisition and takeover bids
- Purchases and sales of companies / parts of companies
- Sales of essential assets (e.g. patents)
- Major operating investments
- Transfer of assets between funds (e.g. private equity funds)
- Generally in the case of transactions between spheres close to each other