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PPA · IFRS 3 · Business Combinations · CFA-Led · UAE · GCC · Big 4 Accepted

Purchase Price Allocation
UAE & GCC (IFRS 3)

IFRS 3 Business Combinations · Intangible Asset Identification & Fair Value · MPEEM · Relief from Royalty · Big 4 Accepted · Fixed Fee

What is purchase price allocation (PPA)? Purchase price allocation (PPA) is the process required by IFRS 3 (Business Combinations) of allocating the price paid in an acquisition to the identifiable assets and liabilities of the acquired business at their fair values. This includes separately identifying and valuing intangible assets — customer relationships, brand, technology, order backlog, and other contractual or separable assets — that may not have appeared on the acquiree's pre-acquisition balance sheet. Any remaining unallocated amount is recognised as goodwill. A PPA must be completed within 12 months of the acquisition date.

CFA Charterholder
IFRS 3 Compliant
Big 4 Accepted UAE
Fixed Fee from AED 20,000

Every acquisition completed under IFRS requires a purchase price allocation. Getting it right determines how your acquisition looks in your financial statements for the next decade — through annual goodwill impairment tests and intangible amortisation charges. Getting it wrong creates audit complications, restatement risk, and misleading financial metrics. Corvian Advisory delivers IFRS 3-compliant PPAs that your auditors accept and your management can explain.

Discuss Your PPA M&A Advisory UAE
AED 20K
Fixed Fee Starting From
12 Mo
IFRS 3 Measurement Period
IFRS 3
Standard Applied
IAS 38
Intangible Asset Recognition Standard
Identifiable Intangibles

Intangible Assets Typically Identified
in a UAE Business Combination PPA

Under IFRS 3, all identifiable intangible assets must be separately recognised at fair value — even if they were not on the acquiree's balance sheet. These are the most commonly identified classes in UAE M&A transactions.

Customer-Related
Customer Relationships
Primary Method: MPEEM

The value of the acquired customer base, including existing contracts and the economic value of expected customer renewals and repeat business. Typically the largest intangible in a service or B2B business. Valued using the Multi-Period Excess Earnings Method (MPEEM), which isolates the earnings attributable to the customer relationship after charges for all other contributing assets.

Marketing-Related
Brand / Trade Name
Primary Method: Relief from Royalty

The value of an established brand or trade name that drives customer preference and commands pricing power. Valued using the Relief from Royalty Method — computing the royalty the business would otherwise pay to a third party to use the brand, discounted to present value. Royalty rates are benchmarked from brand licensing transaction databases.

Technology-Related
Developed Technology / Software
Method: Relief from Royalty / Cost

Proprietary software, algorithms, platform code, or product technology. Valued using Relief from Royalty (if licensing rates are observable) or the Cost Approach (reproduction/replacement cost less obsolescence). For SaaS and technology businesses, technology is often the primary value driver alongside customer relationships.

Contract-Related
Order Backlog
Method: Incremental Cash Flow

The value of signed contracts and purchase orders at the acquisition date that have not yet been fulfilled. Valued using the incremental cash flow method — the net cash flows expected from completing the backlog, discounted at an appropriate rate. Typically a short-lived intangible with a useful life of 6–24 months.

Contract-Related
Non-Compete Agreements
Method: With-and-Without

Agreements signed by selling shareholders not to compete with the acquired business for a defined period. Valued using the With-and-Without Method — comparing the value of the business with the non-compete in place versus without it. The difference represents the economic value of the protection provided by the agreement.

Regulatory / Other
Licences & Regulatory Approvals
Method: Income / Cost / Market

UAE regulatory licences — financial services licences (FSRA, DFSA), healthcare licences, education licences, and similar — have economic value where they are scarce, non-replicable, or time-consuming to obtain. Valued using income, cost, or market approaches depending on the specific licence type and observable data.

IFRS 3 PPA Process

How Corvian Advisory
Delivers a UAE PPA

A purchase price allocation is a technically demanding exercise. It requires deep understanding of the acquired business, access to financial and operational data, knowledge of appropriate valuation methods for each intangible class, and experience calibrating the Weighted Average Return on Assets (WARA) against the transaction's discount rate (WACC) to ensure internal consistency.

Corvian Advisory delivers PPAs as a collaborative process — working closely with management and your audit team throughout. We start with the acquisition documents and financial model, conduct management briefings for each business unit, and apply the appropriate valuation method to each identified intangible class.

"A well-executed PPA minimises unexplained goodwill and produces financial statements that tell a coherent post-acquisition story."

All assumptions are documented, all inputs are supported by observable market data where possible, and all methods are applied with full working papers — in the format Big Four and mid-tier audit teams expect to receive. We respond to auditor queries as part of every engagement at no additional cost.

1

Acquisition Document Review

Review SPA, financial model, data room, management accounts, and audited financials of the acquiree. Understand the deal rationale and synergy assumptions.

2

Intangible Asset Identification

Identify all intangible assets that meet the IFRS 3/IAS 38 recognition criteria — separability or contractual-legal basis — whether or not they were on the pre-acquisition balance sheet.

3

Management Briefings

Interview management on each identified intangible — customer relationships, brand strength, technology, etc. Gather inputs for projections and assumption documentation.

4

Valuation Modelling

Apply appropriate method to each intangible class. Build MPEEM, Relief from Royalty, and other models. Calculate Contributory Asset Charges (CAC) for MPEEM. Cross-check WARA vs. WACC.

5

Report & Audit Support

Issue IFRS 3 PPA report with full working papers. Provide amortisation schedules per intangible class. Respond to auditor queries. Provide financial statement note disclosures.

Valuation Methods

Intangible Asset Valuation Methods
in IFRS 3 PPA

Intangible AssetPrimary Valuation MethodKey InputsUseful Life (Typical)
Customer RelationshipsMulti-Period Excess Earnings (MPEEM)Revenue retention, customer attrition rate, margin, CAC, discount rate5–15 years
Brand / Trade NameRelief from RoyaltyRevenue base, royalty rate (from database), discount rate, tax rateIndefinite or 10–20 years
Developed TechnologyRelief from Royalty / Reproduction CostRevenue attributable, royalty rate, development cost, obsolescence3–10 years
In-Process R&DIncome Approach (with completion probability)Revenue, costs to complete, completion probability, discount rate3–7 years post-completion
Order BacklogIncremental Cash FlowBacklog revenue, margin, expected completion period, discount rate6–24 months
Non-Compete AgreementWith-and-Without MethodRevenue at risk, competitive threat probability, discount rateContractual life
Favourable LeasesIncremental Cash FlowMarket rent vs. contract rent, remaining lease term, discount rateRemaining lease term
Licences / ApprovalsIncome / Cost / MarketLicence scarcity, cost to replicate, income attributable to licenceContractual life or indefinite
Transparent Pricing

PPA Fees in UAE & GCC

Fixed fee, agreed before work begins. No hourly billing. Scope is determined by the number of identified intangibles, transaction complexity, and data availability.

Standard Acquisition
Single Entity / Limited Intangibles
AED 20,000 – AED 40,000

Single-entity acquisition with 2–4 identifiable intangible classes. Clear financial data. Completed within 4–6 weeks of engagement.

Intangible identification assessment
Fair value modelling (2–4 intangible classes)
Goodwill calculation and reconciliation
WARA / WACC cross-check
Amortisation schedules per intangible
Audit-ready PPA report and disclosures
Complex Acquisition
Multi-Entity / Complex Intangibles
AED 45,000 – AED 80,000

Multi-entity acquisitions, 5+ intangible classes, in-process R&D, complex deal structures, or acquisitions requiring financial statement reconstruction.

Full intangible identification workshop
Fair value modelling (5+ intangible classes)
In-process R&D valuation if applicable
Multi-entity consolidation PPA
Sensitivity analysis and scenario modelling
Full auditor query support throughout
FAQ

Purchase Price Allocation UAE –
Frequently Asked Questions

What is a purchase price allocation (PPA) under IFRS 3?+
A purchase price allocation under IFRS 3 is the allocation of the acquisition price paid in a business combination to the identifiable assets and liabilities of the acquired business at their fair values at the acquisition date. All identifiable intangible assets must be separately recognised at fair value — even if they were not on the acquiree's pre-acquisition balance sheet. The remaining unallocated amount after fair-valuing all identified assets and liabilities is recognised as goodwill. The PPA must be provisionally completed by the first reporting date after acquisition, with final numbers within 12 months.
When is a PPA required in the UAE?+
A PPA is required whenever a UAE company that prepares IFRS financial statements acquires a business — including subsidiary acquisitions, partial acquisitions resulting in control, and asset acquisitions that constitute a business under IFRS 3. This covers DIFC entities, ADGM entities, free zone companies audited by Big Four or mid-tier firms, subsidiaries of listed groups, and any company preparing for a UAE stock exchange listing. It also covers cross-border acquisitions where the acquiring entity uses IFRS. The PPA must be completed within 12 months of the acquisition date.
What is the MPEEM method and why is it used for customer relationships?+
The Multi-Period Excess Earnings Method (MPEEM) is the standard approach for valuing the primary intangible asset in a PPA — most commonly customer relationships. MPEEM calculates the earnings attributable specifically to the customer relationship by starting with total business cash flows and deducting a contributory asset charge (CAC) for each other asset contributing to those earnings — working capital, fixed assets, assembled workforce, brand, technology. The remaining "excess earnings" attributable to customer relationships are then discounted at the asset-specific discount rate to arrive at fair value. MPEEM is technically demanding because the CAC structure must be carefully calibrated to avoid over- or under-stating individual intangible values.
What is the Relief from Royalty method in a PPA?+
The Relief from Royalty method values an intangible asset — typically a brand name or technology — by calculating the royalty the business would otherwise have to pay to a third party to use that asset. The fair value is the present value of after-tax royalties saved by owning the asset. Key inputs are: the revenue base to which the royalty applies, the royalty rate (sourced from licensing transaction databases like RoyaltySource or ktMINE), the remaining useful life of the asset, and the appropriate discount rate. The royalty rate selection is the most significant judgment in the model — it must be benchmarked against arm's-length brand licensing transactions in comparable industries.
How does goodwill arise in a PPA and is it amortised?+
Goodwill in an IFRS 3 PPA is the residual amount after all identifiable assets and liabilities have been measured at fair value. It represents synergies, assembled workforce value, buyer-specific premiums, and other value that cannot be separately identified. Under IFRS, goodwill is not amortised — instead it is tested annually for impairment under IAS 36. A high-quality PPA that properly identifies and values intangibles reduces unexplained goodwill and produces more informative financial statements. All else equal, lower goodwill and higher identified intangibles (which are amortised over their useful lives) produce lower future profits but a more accurate picture of the acquisition economics.
How much does a PPA cost in the UAE?+
Corvian Advisory's PPA fees start from AED 20,000 for straightforward single-entity acquisitions with 2–4 identifiable intangible classes, up to AED 80,000 for complex multi-entity acquisitions with 5+ intangible classes, in-process R&D, or financial statement reconstruction requirements. All fees are fixed upfront — no hourly billing. The scope is agreed in writing before work begins. Fees include the full valuation report, amortisation schedules, financial statement note disclosure language, and auditor query responses.
What is the WARA and why does it matter in a PPA?+
The Weighted Average Return on Assets (WARA) is a cross-check used in PPA analysis to verify internal consistency. After assigning fair values and appropriate asset-specific discount rates to all identified assets (tangible and intangible), the WARA is the blended discount rate across the entire asset base — weighted by each asset's fair value as a proportion of enterprise value. The WARA should approximately equal the WACC used to value the overall business. If the WARA materially differs from the WACC, it signals that individual asset discount rates or fair values are incorrectly calibrated. This cross-check is a key auditor focus area in any PPA review.
How long does a PPA take to complete in the UAE?+
A standard UAE PPA takes 4–6 weeks from engagement to delivery of the final report. Complex acquisitions — with multiple entities, cross-border structures, or reconstruction of acquisition-date financials — take 8–12 weeks. The IFRS 3 measurement period allows up to 12 months from acquisition date, but starting the PPA promptly avoids last-minute pressure on annual audit timelines and reduces the risk of measurement period adjustments that require restating provisional numbers.

IFRS 3 PPA for Your UAE
Acquisition

Fixed fee from AED 20,000. Share your acquisition details and we will confirm scope and fee within 24 hours.

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