How do you value "synergy" in an impairment test?


"We actually try to figure out the cashflows from the competitive advantage," said Mark Edwards (GT), speaking at the Hardball with Hitchner wrapup session at the AICPA National BV Conference this afternoon.  But others try to deal with it by looking at the BVR/Mergerstat Control Premium Study and applying a control premium.  "I don't particularly like the control premium approach here, though," added Jim Alerding.

"The question that needs to be justified to auditors is why some one should pay 20% more," said Edwards.  "So just looking at control premium data may not be sufficient justification.   You'd like to see the benefits in the cashflow of the assumed control value."

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