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Newsletter - PPA Statistics Study 2016
This newsletter provides a summary of the new statistics report of the purchase price allocation (“PPA”) studies of 2015. For this report, PPAnalyser has reviewed 379 PPA's that related to transactions in 2015. The report is available on our website.
General statistics
PPAnalyser analysed 379 PPA's, the majority of which related to US transactions (89%). Most transactions are observed in the manufacturing sector, with 35% of the total amount of transactions in 2015. The second largest industry was the Services industry with 31% of all transactions. The median purchase price of all transactions was USD 54 million, approximately 21% higher than the median purchase price in 2014. While the median purchase for large transactions (> USD 500 million) decreased, the median purchase price for smaller transactions increased. Looking at sectors a sharp increase of the median purchase price is shown in the manufacturing and services industry (+63%).
Allocation across intangibles
In general, the proportion of intangible assets in relation to total assets increased. The increase is shown for intanigbles, goodwill and a combination of both. Also, the increase is shown for all transaction sizes. The strongest increase is shown for transactions with an asset value between USD 250 million and USD 1 billion. These observations suggest an allocation shift from tangible assets to goodwill and intangible assets.
Allocation accross industries
The industries with the highest proportion of intangibles assets compared to total assets are Manufacturing, Transportation & Public Utilities and Services. For Transportation & Public Utilities, a 1/3 share allocation to intangible assets can be observed. The Services industry has the highest share of goodwill among all industries. Mining, Wholesale Trade and Construction have the highest proportion of tangible assets compared to total assets among all industries.
Useful life per intangible asset
The number of PPA's that disclosed the economic useful life increased by 6% (from 45% in 2014 to 51% in 2015). In 2015, the median economic useful life of marketing related and technology related intangibles remained the same (4 years and 5 years respectively). The median economic useful life of customer-related intangibles increased from 6 to 6.3 years and the median economic useful life of contract-related intangibles decreased from 5.3 to 5 years. When looking at industries, the economic useful life for marketing related intanigbles is highest for in retail and wholesale trade (5.0) and lowest in agriculture, forestry and fishing (1.5). For customer related intangibles, the highest economic useful life is shown for mining while the lowest economic useful life is shown for retail trade.
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