We were engaged by a multi-billion dollar company that was acquired by a private equity firm to determine the fair value of certain tangible and intangible assets acquired and liabilities of three reporting units assumed as a result of the transaction for financial reporting purposes. In addition, we had to determine the fair market value of equity of the three legal entities for tax reporting purposes.
The project involved multi-discipline coordination among intangible asset, personal and real property experts as well as consideration of tax vs. financial reporting issues that were not always aligned. The three reporting units were legally structured differently, with one receiving a step-up in asset basis and one involving a non-US entity. The valuation of the three legal entities had to not only reconcile with the total purchase consideration but consider the tax consequences. Although the valuation of specific assets, both tangible and intangible, was not a big driver for financial reporting purposes, they directly impacted tax implications for the buyer and seller.