Valuing Contigent Consideration: Challenges and Solutions  

Oleh:

Zyla, Mark L.

Jenis: Article from Bulletin/Magazine
Dalam koleksi: Journal of Accountancy vol. 212 no. 5 (Nov. 2011), page 28-33.
Topik: Contingent Payments; Business Valuation; Acquisitions & Mergers; Fair Value
Fulltext: Valuing Contingent Consideration.pdf (64.58KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ85.31 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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In a roundtable discussion, an expert panel addressed the fair value measurement of contingent consideration on business combinations. Daniel Peckham, principal, Deloitte Financial Advisory Services LLP, said there has been a lot of diversity in practice and debate in this area, with the lead accounting firms working together informally for months trying to develop best practices. The discussions among the firms came to a point where two leading views emerged. View A, the liability view, is the view that the transaction premise is based on a transfer of a contingent consideration liability to a counterparty. View B, the asset view, is essentially based on the measurement of the corresponding asset. According to Travis Chamberlain, valuation specialist, Clifton Gunderson LLP, the earnout payment is fixed and contingent on revenue exceeding a fixed threshold. Earnouts require valuation methods to be tailored to the unique factors that affect the underlying metric used to trigger the payment, said David Dufendach, partner, Grant Thornton LLP.

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