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PPA Benchmark
 
 
In this newsletter we take a look at a recent PPA and benchmark it by making use of the PPAnalyser database. For the benchmark, a selection is made of PPA's over the past five years within the Software industry. The purpose of the benchmark is to assess to what extent the allocation of intangibles of the selected PPA falls within the industry standards. The PPA we investigated relates to the October 2015 acquisition of Autoweb.com, Inc. by Autobytel for a purchase price of USD 28 million. The outcome is presented in the next paragraphs.
 
 
Customer to total assets
 
     
To determine an industry specific customer to total assets ratio distribution, a dataset of 277 comparable PPA's was identified. If we look at the distribution, it can be noted that the curve has a downward slope. The median is 14% and the vast majority of the observations lies between 0 and 40%. The Autoweb PPA allocated 21% of the total assets to Customer intangibles. This percentage lies slightly above the median of the industry benchmark. Therefore, it can be concluded that the allocation of customer intangibles of Autoweb is in line with the industry standard.
 
 
Technology to total assets
 
 
To determine a technology to total assets ratio distribution, a dataset of 283 comparable PPA's was identified with the same Software SIC code range. If we look at the distribution, it can be noted that the curve has a downward slope, starting at 20%. The median is 17% and the vast majority of the observations lies between 0 and 20%. The Autoweb PPA allocated 27% of the total assets to technology intangibles. This percentage lies slightly above the median of the industry benchmark. Therefore it can be concluded that the allocation of technology intangibles of Autoweb is in line with the industry standard.
 
 
Goodwill to total assets
 
     
To determine a goodwill to total assets ratio distribution, a dataset of 401 comparable PPA's was identified. If we look at the distribution, it can be noted that the curve has an almost perfect parabol shape. The median is 56% and the vast majority of the observations lies between 45% and 75%. The Autoweb PPA allocated 21% of the total assets to goodwill. This percentage lies significantly below the median of the industry benchmark. This indicates that the percentage determined for the PPA significantly deviates from the industry standard. Altough the allocation of customer- and technology intangibles is in line with industry standards, the allocation of goodwill is not. Further investigation may be needed to explain the deviation from industry standards.
 
 
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