Purchase Price Allocation (PPA) Study, India

Authored by: CA Punit Khandelwal, CA Sunit Khandelwal and Prof. Divya Aggarwal (EMLV, France; ex-professor IIM, Ranchi)

Assisted by: CA Akshat Jain, Yash Saraswat, Anubhav Jain and Khushi Chouksey

We are pleased to release the second edition of Incwert’s Purchase Price Allocation Study in India covering the financial years from 2017 to 2023.

We have compiled the study after analysing public filings for 930 completed transactions from FY2017 to  FY2023 and have summarised the results by the class of intangible, size of the transaction, rate of occurrence of intangibles within the industry, contingent consideration, select key transactions and useful life of the intangibles.

Our study, guided by the need for comparability with peers in the industry, determines the types of identified and recorded intangibles and allocation per cent of intangibles within the industry. In our view, the allocation of the purchase price of an acquired business significantly affects the financial reporting of the current and future operating results of the acquiring entity and therefore many times there is heightened concern and increased scrutiny of assets acquired as Business Combinations (Ind AS 103) by management, analysts, investors, regulators, valuation specialists and auditors.

As an independent valuation specialist firm, we recognise that valuation is a constantly evolving discipline that has been shaped by practical and theoretical advances. Many high-quality research papers on valuation subjects never find their way to influencing the evolution of standards and practice due to a lack of exposure to practitioners. Our goal is to act as a catalyst for the adoption of breakthrough valuation research. Considering the gap in the availability of a ready-reckoner in the public domain for India-specific transactions, we have attempted to compile a summary of the intangibles identified in the allocation of the purchase price.

We hope you find the results of our study of interest and value and thank you for taking out time to read Incwert’s Purchase Price Study in India.