DATE

May 2017

Goodwill impairment testing and purchase-price allocation

Valuing the key intangible and tangible assets of a mobile telecoms operator following its acquisition by our client.

Challenge

Our client had recently purchased a mobile operator. However, in the period leading to its first reporting date, profit performance had slipped and our client had been forced to consider whether a write-down of goodwill would be required under International Accounting Standards. 

Approach

Creating a cash-flow forecast based on our understanding of the dynamics in the specific market and the economics of the subsidiary’s business, we identified a value range for the business.

 

We also identified comparable multiples drawn from listed operators and relevant M&A transactions to provide an additional guide to likely market valuation.

Value

As a result of our work our client was able to take the decision to write down the value of its investment to a defensible level.

 

We subsequently revalued the operator's various assets and liabilities, including intangibles such as its customer base and spectrum licenses, enabling it to recalculate the carrying value of goodwill.

Goodwill impairment testing and purchase-price allocation

Valuing the key intangible and tangible assets of a mobile telecoms operator following its acquisition by our client.

DATE

May 2017

Challenge

Our client had recently purchased a mobile operator. However, in the period leading to its first reporting date, profit performance had slipped and our client had been forced to consider whether a write-down of goodwill would be required under International Accounting Standards. 

Approach

Creating a cash-flow forecast based on our understanding of the dynamics in the specific market and the economics of the subsidiary’s business, we identified a value range for the business.

 

We also identified comparable multiples drawn from listed operators and relevant M&A transactions to provide an additional guide to likely market valuation.

Value

As a result of our work our client was able to take the decision to write down the value of its investment to a defensible level.

 

We subsequently revalued the operator's various assets and liabilities, including intangibles such as its customer base and spectrum licenses, enabling it to recalculate the carrying value of goodwill.