Stout was engaged to assist with a $746 million acquisition and to allocate the purchase price for financial reporting purposes. The scope of our engagement included a determination of the fair value of deferred revenue, an equity method investment, and certain intangible assets acquired from the seller, including customer relationships, trade names and trademarks, and non-compete agreements. We completed the assignment in a timeline consistent with the organization’s quarterly filing requirements.
Our analysis was required to be done on the basis of geography, including the U.S., Canada, and U.K. The company acquired had grown through an acquisition strategy over its history, including the acquisition of six companies in the five-year period preceding the sale to the purchasing organization. As each target continued to use its own legacy accounting systems, we had to aggregate disparate, incomplete, and in certain instances conflicting data to perform our analysis.
The use of financial data from different systems required additional procedures by the organization’s external auditors to assess the validity of the data. That, in turn, required additional analyses by the Stout engagement team.
Since Stout had performed similar analyses for five targets acquired by this company leading up to this transaction, we performed a comparative assessment of the data, assumptions, and fair value conclusions to the previous targets to assist the audit team in assessing our valuation report.