Section 3. General issues in management: The benefits of a pre-deal purchase price allocation for acquisition decisions: An exploratory analysis

Henning Zülch, Dominic Detzen, Martin Wünsch, Torsten Wulf, Philip Meißner

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

This paper analyzes 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. The authors 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, the authors conduct a qualitative content analysis to identify the method's benefits in the context of friendly acquisitions. The results suggest that, subject to cost-benefit considerations, a pre-deal PPA increases decision quality and leads to more comprehensive acquisition decisions. Furthermore, the paper proposes several best practice approaches to improve the implementation of a pre-deal PPA.

Original languageEnglish
Pages (from-to)59-68
Number of pages10
JournalProblems and Perspectives in Management
Volume11
Issue number1
Publication statusPublished - 1 Jan 2013

Keywords

  • Decision comprehensiveness
  • Decision quality
  • M and A process
  • Pre-deal PPA

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