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We are pleased to present the findings of KNAV’s 2023 Purchase Price Allocation Study (“2023 Study”), which offers valuable insights into the allocation of purchase consideration in business combinations. This study, meticulously conducted by analysing public filings for 606 transactions between January 1, 2022 to December 31, 2022, provides a comprehensive overview of industry trends and deal dynamics.

Key Observations:

Allocation Trends:

On average, 39% of the total purchase consideration was allocated to identifiable intangible assets, while 51% was attributed to goodwill, with notable variations across industries. On overall basis, contingent consideration (“CC”) accounted for 18% of the total purchase consideration.

Sector Activity:

Industrials and Information Technology sector emerged as the most active for M&A activities, boasting the largest transaction size.

Goodwill and Intangible Assets:

Health Care witnessed the highest percentage of intangible assets allocation whereas Real Estate had the highest percentage of goodwill to purchase consideration.

Contingent Consideration:

Approximately 25% of the analysed transactions in 2023 Study included contingent consideration as a crucial component of the purchase consideration.

The 2023 Study sheds light on critical aspects of purchase price allocation in business combinations, offering valuable insights for stakeholders in the M&A landscape. Valuers, auditors, and regulators will find this study useful as they navigate the complexities of transaction valuation and purchase price allocation. By leveraging the insights from this analysis, professionals can enhance their decision-making processes and ensure compliance with regulatory requirements.