Step Acquisition

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.

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 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.

A potential obligation arising from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity's control, or a present obligation where payment is not probable or the amount cannot be reliably measured. Under IFRS 3, contingent liabilities assumed in a business combination are recognised at fair value at the acquisition date even if it is not probable that an outflow of resources will be required, provided fair value can be reliably measured.

The equity in a subsidiary not attributable to the parent company, representing the ownership stake held by minority shareholders. Under IFRS 3, the acquirer chooses for each business combination to measure the NCI either at fair value (which results in full goodwill) or at its proportionate share of the acquiree's identifiable net assets (which results in partial goodwill).

An initial estimate recognised in a purchase price allocation when the accounting for a business combination is incomplete at the end of the reporting period in which the acquisition occurs. Under IFRS 3 and ASC 805, the acquirer has a measurement period of up to 12 months from the acquisition date to finalise the fair values of identifiable assets, liabilities, and consideration.

What is Customer Lifetime Value (LTV)?

LTV is the total profit a company expects to generate from a customer relationship over its lifetime — calculated as (ARPU × Contribution Margin) / Monthly Churn.

What key metrics do Series A investors evaluate before investing?

Series A investors focus on monthly recurring revenue (typically £50-200K+), revenue growth rate (15-20% month-on-month), unit economics (LTV:CAC > 3:1), retention rates, and evidence of product-market fit.

How does a buy-and-build strategy work?

You acquire a platform business, then add a series of smaller bolt-on acquisitions to it over time, compounding scale and, often, re-rating the enlarged group to a higher multiple than the parts commanded alone.