The PPAV process is one whereby the fair value of all significant business intangible assets and liabilities of an acquired enterprise must be determined in accordance with IFRS 3: Business Combinations.

IFRS 3 requires that once an acquisition becomes effective all intangible assets are separately identified apart from goodwill and carried at fair value on the acquirer’s statement of financial position.

These valuations require tailored expertise due to the judgement required in assigning individual values to a variety of intangible assets. Furthermore, they cannot be performed by a firm’s auditor due to a conflict of independence as the auditors would be required to audit these fair values. Thus, by using a qualified external valuation expert, the transparency, reliability and independence of the fair value of the intangibles will be heightened.

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