With B2B companies, valuing customer relationships in business combinations takes center stage

BVR recently published a valuable study for analysts who do fair value work, performing purchase price allocations. Benchmarking Identifiable Intangibles and Their Useful Lives in Business Combinations (email for more information), in an analysis of 360 PPAs, found that, in B2B companies, customer relationships represented the largest intangible asset (aside from goodwill) identified. It stands to reason:  when these relationships are well developed and ongoing, they produce sustainable returns to shareholders.

The value of a customer relationship should reflect the present value of future incomes from that relationship, and the value reflected in a purchase price allocation should reconcile to the sum of all the values of individual customer relationships held by an acquired company, though it would be prohibitively expensive to perform such a proof.

On Thursday, November 29, 2012, Poonam Vaidya, ASA, CBA, of Crowe Horwath, will unveil and solve the mysteries inherent in valuing customer relationships in a BVR live event. Valuation analysts who live in the fair value world will want to mark their calendars for this CPE-qualifying webinar.