Multi-Period Excess Earnings Method (MPEEM)

A valuation technique used to isolate the value of a specific intangible asset by deducting the returns attributable to all other assets (tangible and intangible) from total earnings. The multi-period excess earnings method is the most common approach for valuing customer relationships and technology in purchase price allocations.

A variant of the multi-period excess earnings method used to value customer relationship intangible assets, which analyses the business from the perspective of a hypothetical distributor that owns only the customer relationships and licenses all other assets from the operating entity. The distributor method simplifies contributory asset charge estimation by modelling a lean distribution business rather than the full operating entity.

A valuation approach that estimates the value of a business by adjusting the book values of all assets and liabilities to their fair values, including the recognition of off-balance-sheet intangible assets that meet IFRS 3 or ASC 805 recognition criteria. The adjusted net asset method is primarily used for asset-holding companies, investment vehicles, and businesses where value resides primarily in the asset base rather than earnings capacity.

A valuation technique that estimates the value of an intangible asset by modelling the cash flows of a hypothetical business that starts from scratch ('greenfield') with only the subject asset in place, building up all other assets over time. The greenfield method captures the head-start value of having the intangible asset from inception.

The required accounting method for business combinations under IFRS 3 and ASC 805, which involves identifying the acquirer, determining the acquisition date, recognising and measuring the identifiable assets acquired and liabilities assumed at fair value, and recognising goodwill or a gain from a bargain purchase. The acquisition method replaced the previously permitted pooling of interests method and ensures that all identifiable intangible assets are separately recognised at fair value on the acquirer's balance sheet.

An approach to measuring goodwill in a business combination where goodwill is recognised for both the acquirer's share and the non-controlling interest's share, resulting in a higher total goodwill figure. Under ASC 805, the full goodwill method is mandatory for all business combinations.

A valuation technique that estimates the value of an intangible asset by comparing the projected cash flows of a business with the asset to those without it. The difference in present value represents the asset's contribution and is commonly used to value non-compete agreements, assembled workforces, and technology assets.

A market approach valuation technique that estimates the value of a subject company by reference to the trading multiples of publicly listed companies with similar business characteristics. The method involves identifying comparable public companies, selecting appropriate valuation multiples (such as EV/EBITDA or P/E), making adjustments for differences in size, growth, risk, and marketability, and applying the adjusted multiples to the subject company's financial metrics.