Challenge

A producer of branded personal care products engaged VRC to estimate the fair value of certain intangible assets acquired in a business combination, as per the requirements of ASC 805. The acquired company manufactured a leading brand within its market niche. It also manufactured private label products for a number of its customers.

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Solution

VRC, in cooperation with management, identified the portion of company results that were attributable to the sale of branded and private label products. It then applied valuation techniques to estimate the fair value of intangible assets for each aspect of the business. For the branded products the majority of the intangible assets’ value was ascribed to the brands and with a limited portion attributable to the customer relationships. For the private label portion of the business, the only identifiable intangible asset was the customer relationships.

Perspectives

Co-CEO Justin Johnson featured in PE Hub Network, the online community for professionals in private capital.

Justin Johnson Featured in PE Hub: Rollover Equity for PE Deals; Issues and Solutions

By: Justin Johnson

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