Client: Private Equity Firm Specializing in Complicated Acquisitions
Challenge: Perform Purchase Price Allocation Despite Imperfect Depreciation Schedules
A U.S. private equity firm paid $160 million for a company recognized as a leader in designing and manufacturing windows, doors and specialty products for the recreational vehicle (RV) industry. The acquiring firm often partners with companies in complex and challenging situations as such corporate divestitures, bankruptcies, restructurings and private family ownership.
The private equity firm engaged AccuVal to perform a purchase price allocation under Financial Accounting Standards Board Statement No. 141. Management chose AccuVal based on its excellent past experience with the firm and because of our depth of knowledge in the RV industry.
The acquired company, which had previously recorded $330 million in sales, serves hundreds of customers through 11 operating units, including nine plants in five states. In analyzing the company's depreciation schedules, AccuVal professionals discovered that not all operating units' records represented the true historical costs of the machinery and equipment, making it impossible to use all of the company's depreciation schedules in the analysis and develop accurate values. But our appraisers' in-depth knowledge of manufacturing processes enabled them to generate very detailed descriptions of the major machinery and equipment, highlighting the capacities and specifications that make each asset unique. This ensured replacement costs were accurately estimated as the starting basis for determining the fair value of the assets.
This attention to detail and insistence on accuracy helped not only ensure that the valuation was supportable and passed the auditor's scrutiny, it also resulted in a valuation that can reliably be used for asset-based lending in the future and provided an accurate equipment maintenance log. AccuVal experts frequently provide such value-added results by recognizing multiple ways customers can benefit from information generated during the engagement.
The financial filing deadline for the acquisition was completed on time and within budget, and the additional value-added cataloguing of existing equipment would ensure that future valuations could be expedited.
Deep relationships built on performance and trust. Specific knowledge of assets used in a variety of manufacturing environments. Attention to detail. Meeting deadlines. That's The AccuVal AdVantage™ at work.