The Benefits of a Pre-Deal Purchase Price Allocation for Acquisition Decisions: An Exploratory Analysis

28 Pages Posted: 29 May 2010 Last revised: 10 Feb 2013

See all articles by Henning Zülch

Henning Zülch

HHL Leipzig Graduate School of Management

Dominic Detzen

Handelshochschule Leipzig (HHL)

Martin Wuensch

Handelshochschule Leipzig (HHL)

Torsten Wulf

University of Marburg

Philip Meissner

University of Marburg

Date Written: February 5, 2013

Abstract

In this paper, we analyze the benefits of a pre-deal purchasing price allocation (pre-deal PPA), which acquirers have come to integrate into an acquisition process to examine the effects of a potential acquisition on the acquirer’s financial statements. We take a management perspective and investigate if the tool improves the comprehensiveness and quality of acquisition decisions. Based on an exploratory analysis using the results of semi-structured interviews with 24 accounting professionals from 19 Germany-based companies, we conduct a qualitative content analysis to identify the method’s benefits. Our results suggest that, subject to cost-benefit considerations, a pre-deal PPA increases decision quality and leads to more comprehensive acquisition decisions. Furthermore, we propose several best practice approaches to improve the implementation of a pre-deal PPA.

Keywords: Pre-Deal PPA, decision comprehensiveness, decision quality, M&A process

Suggested Citation

Zülch, Henning and Detzen, Dominic and Wuensch, Martin and Wulf, Torsten and Meissner, Philip, The Benefits of a Pre-Deal Purchase Price Allocation for Acquisition Decisions: An Exploratory Analysis (February 5, 2013). Available at SSRN: https://ssrn.com/abstract=1616563 or http://dx.doi.org/10.2139/ssrn.1616563

Henning Zülch (Contact Author)

HHL Leipzig Graduate School of Management ( email )

Jahnallee 59
Leipzig, Saxony D-04109
Germany
+49(341)9851701 (Phone)
+49(341)9851702 (Fax)

HOME PAGE: http://www.hhl.de/faculty-research/faculty/accounting-auditing/

Dominic Detzen

Handelshochschule Leipzig (HHL) ( email )

Jahnallee 59
Leipzig, D-04109
Germany

Martin Wuensch

Handelshochschule Leipzig (HHL) ( email )

Jahnallee 59
Leipzig, 04109
Germany

Torsten Wulf

University of Marburg ( email )

Universitätsstrasse 24
Marburg, D-35032
Germany

Philip Meissner

University of Marburg ( email )

Universitätsstrasse 24
Marburg, D-35032
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
248
Abstract Views
2,031
rank
124,223
PlumX Metrics