Purchase Price Allocation for a Specialty Food Brand Acquisition

The brief

A specialty food brand had been acquired. The acquirer needed a complete IFRS 3 purchase price allocation: identify every intangible asset, assign a value to each, determine what was goodwill and what wasn’t, and produce a report the audit team could rely on without reservation.

The company’s primary intangible was its brand — and the proprietary right to manufacture its recipes. That combination required the Relief from Royalty Method, with royalty rate support drawn specifically from branded food manufacturer transactions. Not a generic IP database. The IRR was computed at acquisition and reconciled against WACC through a full Weighted Average Return on Assets analysis. Non-compete agreements and customer relationships were each assessed, documented, and formally excluded on supportable grounds.

Building the case

A purchase price allocation is only as good as its ability to survive scrutiny. Any valuator can produce a report — the question is whether it holds when a senior auditor works through it line by line.

This one was built for the auditors. The WARA reconciliation — the test that links individual asset returns back to the implied acquisition return — was documented in full. Tax Amortization Benefit was calculated and incorporated. Every exclusion was in writing with supporting rationale. The documentation was structured around the questions we knew would come, not the questions we hoped wouldn’t.

Any valuator can produce a report. The question is whether it holds when a senior auditor works through it line by line.

Under review

The auditors issued a ten-point written review. Each item was answered in full.

On methodology — royalty rate sourcing, Tax Amortization Benefit, WARA — the documentation held. On the forward projections, where the auditor had flagged the growth assumptions as aggressive relative to historical performance, we put the evidence on the table: 26% compounded revenue growth since founding, and a manufacturing capacity constraint that had been suppressing reported sales relative to actual demand.

The projections weren’t optimistic — they were supply-constrained. The distinction mattered, and the documentation made it clear.

Every conclusion survived. No changes to the core methodology. The valuation was accepted and incorporated into the acquirer’s financial statements.