Clothing and shoe retail and wholesale business

This clothing and shoe retail and wholesale business incorporates five leading and well established brands, sold throughout more than 250 Australian retail stores and has annual revenue of approximately $250 million.

Valuation for purchase price allocation

After being purchased in 2011, the company was required to allocate the purchase price of its intangible assets pursuant to the Australian Accounting Standards Board (AASB) 3 Business Combinations.  The Standard requires a company, once it has purchased a business or entity, to allocate the purchase price to identifiable tangible and intangible assets.

With its reputation for providing robust valuations, Pitcher Partners was appointed by the client to assist it to meet its obligations under AASB.  Pitcher Partners utilises market, income and cost approaches to determine the value of the intangible assets by looking for market evidence for the sale of similar intangible assets, considering the earnings to be generated from the intangible assets and/or determining the cost to replace or reproduce the intangibles.

Pitcher Partners simplified the purchase price allocation process by realising the amount of management time involved in the process.  All the client needed to do was provide Pitcher Partners with:

  • transaction documentation, including:

                 - sale and purchase agreement,
                 - information memorandum,
                 - due diligence report, and

  • original forecasts used to price the transaction.

Pitcher Partners allocated the intangible value acquired amongst the value of the business’ intangible assets including the five brand names, customer relationships and goodwill of the business.

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