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Newsletter - Statistics on customer relationships and case study
This newsletter covers customer relationships related statistics derived from purchase price allocation (“PPA”) studies. Customer relationships value in relation to other assets is discussed. Also, statistics on economic useful life of customer relationships is shared. Finally, we discuss a case study on the use of ratios derived from PPA data for valuation purposes.
Customer relationships in PPA studies
Purchase price allocation studies that include customer relationships related intangibles appear 2,467 times in the PPAnalyser database. This represents 35% of the total amount of PPAs recorded in the database. Customer relationships is the most frequently identified intangible asset included in PPA studies just ahead of trademark intangibles. The average custumer relationship value compared to total assets is 17%. This ratio varies per industry. The graph illustrates the percentage per industry. The highest percentage is observed in the Finance, Insurance, Real Estate industry and the lowest percentage is observed in the Retail Trade industry.
Economic useful lives of customer relationships
The economic useful life of customer relationships is disclosed in 2,026 records of the PPAnalyser database. This represents 55% of the total amount of economic useful life records. The economic useful life of customer relationships is most frequently disclosed after trademarks and technology related intangibles. Of the definite useful life trademarks, the median economic useful life is 10 years. The median varies per industry as illustrated in the graph. The highest economic useful life for customer relationships is observed in the Retail Trade industry and the lowest economic useful life is observed in the Service industry.
Case study - Amortisation of trademarks for tax purposes
Multinational ABC (”Multico”) has a dispute with local tax authorities on the amortisation of a trademark it recently acquired. Although Multico assumed a definite useful life in its PPA study, the tax authorities are not convinced and challenge this assumption. According to them, the trademark has an indefinite useful life and cannot be amortised for tax purposes.

To convince the tax authorities of the arm's length nature of their assumption, Multico decided to perform a search of PPA studies in its industry. The purpose of the search is to identify PPA studies of comparable targets that also include trademarks. Once PPA studies are found, Multico makes a selection of PPA studies which it considers comparable. To guarantee transparency and traceability of the method use, Multico includes an accept or reject justification for each PPA included in the search result. Through the search, Multico is able to provide additional support towards the tax authorities that in the majority of the cases, comparable PPA studies also assume a definite useful life for trademarks.

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