Advanced Merger Model, Part 1: Purchase Price Allocation

What You’ll Learn In This Video

In this lesson, you’re going to learn how to allocate the purchase price in an M&A deal, and why items like Goodwill, Other Intangible Assets, and Deferred Tax Liabilities get created. We’ll be using United Technologies’ $16 billion acquisition of Goodrich Corporation for our example deal here.

Hey there,

In this lesson, you’re going to learn how to allocate the purchase price in an M&A deal, and why items like Goodwill, Other Intangible Assets, and Deferred Tax Liabilities get created.

We’ll be using United Technologies’ $16 billion acquisition of Goodrich Corporation for our example deal here, and you can learn even more since this is a very “real-world” example.

In addition to learning the mechanics of how purchase price allocation works, you’ll also gain insight into why deferred tax liabilities get created and the role they play in deals like this.

You can follow along using the “Before” Excel file above and then check your work with the “After” Excel file.

Coming up next, we’ll continue with the model and move into how to combine and adjust the balance sheets for the buyer and seller.

-Brian

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