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purchase-price-allocation

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Allocates consideration across identifiable assets, intangibles, and goodwill under the acquisition method and shows the amortization drag on reported post-deal earnings.

packs/investment-banking/skills/purchase-price-allocation/SKILL.md

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# Purchase Price Allocation Agent

## When to use
Use this when a deal is signed or modeled and the accounting consequence of the price has to be shown: the opening balance sheet, pro-forma earnings, or the gap between reported and adjusted EPS. Reach for it when a merger model needs deal amortization, or a board asks why accretion on cash earnings becomes dilution on reported earnings.

## What it does
It produces an allocation of consideration under the acquisition method: tangible assets and assumed liabilities stepped to fair value, identifiable intangibles valued and given lives, deferred tax on the step-up, goodwill as the residual, and the amortization charge run through post-deal earnings.

## Method
1. Measure the consideration at fair value. Total what was transferred.
   - Cash, stock at the closing price on the acquisition date, contingent consideration at fair value, and the pre-combination portion of replacement awards, measured by the accounting acquirer, which in a reverse acquisition is not the legal one.
   - Transaction costs are expensed, never capitalized into consideration; it is the commonest error in a first-pass allocation.

2. Step tangible assets and assumed liabilities to fair value. Restate the balance sheet.
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