Step Acquisition

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.

A business combination in which the fair value of the identifiable net assets acquired exceeds the consideration transferred, resulting in a gain rather than goodwill. Under IFRS 3 and ASC 805, the acquirer must reassess whether all assets and liabilities have been correctly identified and measured before recognising a bargain purchase gain in profit or loss.

A relatively small acquisition made by a private equity portfolio company to complement and enhance its existing operations, typically adding new products, customers, geographies, or capabilities. Bolt-on acquisitions are a core component of buy-and-build strategies and are usually integrated into the platform company rather than operated independently.

An acquisition made by an existing portfolio company to expand its scale, capabilities, or market presence, often used interchangeably with bolt-on acquisition in private equity contexts. Add-on acquisitions may range from small tuck-in deals that fill specific gaps to larger transformative transactions that materially change the portfolio company's competitive position.

The total cost of acquiring a new customer, including marketing, sales, and onboarding expenses. Optimising the ratio of customer lifetime value to CAC (LTV:CAC) is a central challenge for growth businesses and a key metric scrutinised by investors.

The total consideration transferred by the acquirer to obtain control of a target business in a merger or acquisition. The purchase price encompasses cash, shares, assumed liabilities, and contingent consideration, and forms the basis for purchase price allocation under IFRS 3 and ASC 805, where it is allocated across identified tangible assets, intangible assets, and goodwill.

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.

The excess of the fair value of identifiable net assets acquired over the purchase consideration in a business combination, now termed a bargain purchase gain under current standards. Under IFRS 3, negative goodwill is recognised immediately in profit or loss after the acquirer reassesses the identification and measurement of all assets and liabilities.