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    • Home
    • About Us
    • Valuation Services
      • Business and Stock
      • Discount Studies
      • ESOP Valuations
      • Fairness Opinions
      • ASC 805
      • ASC 350 - Intangibles
      • Intangible & IP Assets
      • Transfer Pricing
      • 409A Stock Options SARS
      • ASC 360
      • Cost Segregation Study
      • Machinery and Equipment
      • Real Estate
      • Feasibility Study
      • Insurable Value
      • Franchise Valuation
      • Racetracks
      • Golf Course Valuation
    • M&A Advisory
      • M&A Advisory
      • Sell Side
      • Buy Side
      • Valuation
    • Clients Served
    • Contact
    • Leadership Team

(847) -776 -1976

Cambridge Partners & Associates

Signed in as:

filler@godaddy.com

  • Home
  • About Us
  • Valuation Services
    • Business and Stock
    • Discount Studies
    • ESOP Valuations
    • Fairness Opinions
    • ASC 805
    • ASC 350 - Intangibles
    • Intangible & IP Assets
    • Transfer Pricing
    • 409A Stock Options SARS
    • ASC 360
    • Cost Segregation Study
    • Machinery and Equipment
    • Real Estate
    • Feasibility Study
    • Insurable Value
    • Franchise Valuation
    • Racetracks
    • Golf Course Valuation
  • M&A Advisory
    • M&A Advisory
    • Sell Side
    • Buy Side
    • Valuation
  • Clients Served
  • Contact
  • Leadership Team

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FINANCIAL REPORTING | BUSINESS COMBINATIONS

ASC 805 Business Combination Valuations

Cambridge Partners & Associates provides independent valuation services for business combinations under ASC 805, including the valuation of acquired tangible and intangible assets, assumed liabilities, and other interests requiring fair value measurement.

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ASC 805 | BUSINESS COMBINATIONS

Understanding ASC 805

ASC 805, Business Combinations, establishes the accounting requirements for transactions that qualify as business combinations. Under ASC 805, the acquiring company generally recognizes identifiable assets acquired and liabilities assumed at their acquisition-date fair values, with any resulting goodwill or bargain purchase gain recognized in accordance with applicable accounting guidance.

Who Does ASC 805 Apply To?

Companies preparing financial statements under U.S. GAAP may be subject to ASC 805 when a transaction qualifies as a business combination. The guidance affects the accounting and valuation performed following an acquisition and the resulting financial reporting. 

Fair Value Measurement

Fair value measurements performed in connection with ASC 805 are generally developed in accordance with ASC 820, Fair Value Measurement, which defines fair value based on an orderly transaction between market participants at the measurement date. 

Effective Date & Related Guidance

The current business combination guidance became effective for business combinations with acquisition dates beginning in fiscal years after December 15, 2008, replacing the former SFAS 141 framework. Subsequent accounting for certain acquired assets and goodwill may also involve other guidance, including ASC 350.

ASC 805 | PURCHASE ACCOUNTING

PURCHASE PRICE ALLOCATION

Following a business combination, ASC 805 requires the acquisition-date consideration transferred to be allocated to the identifiable assets acquired and liabilities assumed based on their fair values. This process, commonly referred to as a purchase price allocation, establishes the amounts recognized in the acquirer's financial statements and determines the resulting goodwill or bargain purchase gain, when applicable.

Components of a Purchase Price Allocation

Tangible Assets

Tangible assets acquired in a business combination may include property, machinery and equipment, real estate, leasehold improvements, and other physical assets requiring valuation at their acquisition-date fair values

Identifiable Intangible Asset

Identifiable intangible assets acquired in a business combination may include customer relationships, patented technology, trademarks and trade names, franchise agreements, contracts, and other identifiable rights requiring fair value measurement.

Liabilities & Other Considerations

Liabilities assumed in a business combination may include debt, contingent liabilities, contractual obligations, and other financial commitments. These items are evaluated under applicable accounting guidance to determine their appropriate recognition and measurement.

Goodwill

Goodwill generally represents the excess of the consideration transferred, together with any applicable noncontrolling interest and previously held interest, over the fair value of identifiable net assets acquired. It may reflect expected synergies, workforce value, and other benefits that do not qualify for separate recognition.

Key Valuation Considerations

Contingent Consideration

Contingent Assets & Liabilities

Contingent Assets & Liabilities

Contingent consideration, such as earnout payments tied to future performance or other events, generally requires recognition at fair value as of the acquisition date. These arrangements are evaluated based on their terms, expected outcomes, and applicable accounting guidance.

Contingent Assets & Liabilities

Contingent Assets & Liabilities

Contingent Assets & Liabilities

Contingent assets and liabilities arising from contractual or noncontractual arrangements may require recognition and measurement in a business combination. These items are evaluated based on their nature, potential financial impact, and applicable accounting guidance under ASC 805.

Transaction-Related Costs

Contingent Assets & Liabilities

Transaction-Related Costs

Acquisition-related costs, including legal, advisory, accounting, and other professional fees, are generally expensed as incurred rather than included in the consideration transferred. Certain costs, such as those associated with issuing debt or equity, are accounted for under separate guidance.


ASC 805 | VALUATION EXPERIENCE

Assets We Value

Cambridge Partners & Associates has experience valuing a broad range of tangible and intangible assets in connection with business combinations and purchase price allocations across numerous industries.


Our valuation experience includes businesses and assets located throughout North America, South America, Europe, and other international markets.
 

TANGIBLE & INTANGIBLE ASSETS

Technology & Intellectual Property

Technology & Intellectual Property

Technology & Intellectual Property

Valuations of patented and proprietary technology, trademarks, trade names, service marks, and other intellectual property acquired in connection with business combinations.

Customer & Contractual Assets

Technology & Intellectual Property

Technology & Intellectual Property

Valuations of customer relationships, customer lists, non-compete agreements, favorable contracts, and other contractual rights acquired in connection with business combinations.

Real Estate & Equipment

Technology & Intellectual Property

Real Estate & Equipment

Valuations of land, buildings, leasehold improvements, machinery, equipment, and other tangible assets acquired in connection with business combinations.

Specialized Assets

Technology & Intellectual Property

Real Estate & Equipment

Valuations of specialized business assets, including franchise rights, licenses, permits, and other identifiable intangible assets acquired in connection with business combinations.

Book vs. Tax Considerations

Financial Reporting — U.S. GAAP

Financial Reporting — U.S. GAAP

Financial Reporting — U.S. GAAP

Applicable Guidance
ASC 805 and other applicable U.S. GAAP guidance.


Valuation Standard
Fair value based on market participant assumptions.


Transaction Costs
Certain acquisition-related transaction costs are generally expensed rather than included in consideration transferred.


Contingent Consideration
May require recognition and measurement at fair value as of the acquisition date.


Purchase Price Allocation
Consideration is allocated to identifiable assets acquired and liabilities assumed, with residual amounts generally recognized as goodwill or, when applicable, a bargain purchase gain.

Federal Income Tax

Financial Reporting — U.S. GAAP

Financial Reporting — U.S. GAAP

Applicable Guidance
Applicable provisions of the Internal Revenue Code and related tax guidance, depending on the structure of the transaction.


Valuation Standard
Tax allocations may apply fair market value concepts and tax-specific requirements.


Transaction Costs
Treatment varies depending on the nature of the costs and applicable tax rules.


Contingent Consideration
Treatment may differ from financial reporting and depends on the transaction structure and applicable tax requirements.


Purchase Price Allocation
In applicable asset acquisitions, purchase consideration is generally allocated among acquired assets pursuant to the relevant tax allocation rules.

ASC 805 | REPRESENTATIVE EXPERIENCE

Machinery & Equipment

Manufacturing equipment used in food production, automotive, retail, healthcare, power generation, and other industries. 

Technology & Intellectual Property

Patented technology, including technology for a leading water filtration products manufacturer, as well as trademarks, trade names, and service marks for consumer brands. 

Franchise & Related Assets

Franchise agreements, favorable franchise agreements, forgone franchise fees, leasehold interests, owned real estate, equipment, and leasehold improvements, including engagements involving major global food franchise organizations. 

Customer-Related Intangibles

Customer lists and customer relationship assets ranging from individual customer accounts to thousands of accounts, including a customer mailing list containing several million names for a 1,000+ store retailer. 

Energy & Contractual Assets

Power purchase agreements and conversion service agreements involving energy and power producers and utility purchasers. 

Real Estate & Leasehold Interests

Leasehold improvements for portfolios of office buildings and real estate associated with industrial coatings and paint manufacturing facilities in Europe, North America, and South America. 

Automotive Plant Assets & Tooling

 Equipment, plant assets, and tooling utilized in the manufacture of OEM automotive parts. 

Employment & Noncompete Agreements

Valuation of employment and noncompete agreements involving selling shareholders and other key management. 

Banking Intangibles

Core deposit intangible assets associated with banking and financial institutions. 

Other Specialized Assets

IPR&D, ownership interests in business partnerships, non-operating real estate, equities, company airplanes, and other non-operating assets acquired in business combinations. 

ASC 805 VALUATION SERVICES

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