1) Corporate development teams must understand post-transaction accounting adjustments, like purchase price allocations, which can significantly impact reported earnings per share.
2) Estimating adjustments such as intangible asset valuations early improves deal analysis and mitigates risk of dilutive transactions.
3) Key factors that affect adjustments are expected synergies, purchase price, assets acquired, and whether the deal structure is a stock or asset transaction.
5. Conclusion ■ ■ ■ to the close of a deal in order to assist in the accretion / dilution
analysis and provide a more meaningful proposal for Board
Despite being a post-transaction exercise, purchase price approval and to avoid unexpected EPS results post-transaction.
allocation adjustments can materially impact EPS. Corporate This may be of even greater importance in today’s highly active
development professionals need to be prudent in estimating M&A environment, as rising market multiples increase the risk
potential post-transaction adjustments by making sure they of potential EPS dilution. Furthermore, engaging a valuation
fully understand the various components of the deal (e.g., consultant earlier in the process will likely increase the efficiency
expected synergies, assets acquired, type of transaction, market related to the post-transaction purchase price allocation since
participants, etc.). Since this can be a complicated exercise, it most of the data gathering and due diligence process will
may be useful to engage a third-party valuation consultant prior already have been completed.
REAL ESTATE
VALUATION & CONSULTING SERVICES
AS THE LEADING REAL ESTATE ADVISORY
PRACTICE , SRR COMPLETES VALUATIONS
OF ALL PROPERTY TYPES , WORLDWIDE .
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www.srr.com
Litigation Support
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For more information, please contact John N. Ross at jross@srr.com
or Keith E. Darin at kdarin@srr.com.