Financial Reporting Valuations

Goodwill Impairment Analysis (ASC 350)

Annual or event-driven testing of reporting units or assets to determine whether the carrying amount exceeds fair value.

Goodwill impairment analysis is typically performed annually, or more frequently if triggering events occur, to meet financial reporting requirements. Under current ASC 350 guidance, goodwill is tested for impairment at the reporting unit or asset level. The process may begin with a qualitative assessment (“Step 0”) to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. However, given the effort involved in performing a qualitative assessment, many clients prefer to proceed directly to the quantitative test. The quantitative test compares the reporting unit’s fair value to its carrying amount, and if the carrying amount exceeds fair value, an impairment charge is recognized for that difference—limited to the amount of goodwill. Rivem Consulting assists clients with performing goodwill impairment analyses in accordance with ASC 350.

Long-Lived Asset Impairment (ASC 360)

Recoverability testing based on undiscounted cash flows, followed by fair value measurement if impairment is indicated.

Long-lived assets (or asset groups) should be evaluated for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. Under ASC 360, the recoverability test is based on comparing the carrying amount of the asset (or asset group) to the sum of the undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying amount exceeds the undiscounted cash flows, the asset is considered not recoverable, and the impairment loss is measured as the amount by which the carrying amount exceeds its fair value. In some situations, it may be appropriate to proceed directly to fair value measurement—particularly when indicators of impairment are strong or when market-based evidence supports a more immediate valuation.

Business Combination / Purchase Price Allocation (ASC 805)

Allocation of purchase consideration among identifiable tangible and intangible assets and liabilities acquired in a business combination. Fair value measurement of intangible assets and contingent consideration.

Under current ASC 805 guidance, the acquiring entity is required to allocate the purchase consideration to the identifiable assets acquired and liabilities assumed at their respective fair values as of the acquisition date. A transaction may be structured as either a stock or asset acquisition, but for financial reporting purposes, the fair value allocation follows the business combination framework outlined in ASC 805. The scope of a purchase price allocation typically includes valuation of identifiable intangible assets and contingent consideration (“earn-outs”), if applicable. Depending on the nature of the acquired business, identifiable intangible assets may include customer relationships, trade names and trademarks, developed technology, proprietary know-how, non-competition agreements, in-process research and development, backlog, and other forms of intellectual property and intangible assets. Contingent consideration is generally valued using probability-based techniques such as a probability-weighted discounted cash flow model, option-pricing methods, or in more complex scenarios, a Monte Carlo simulation. Rivem Consulting assists clients in performing purchase price allocations and related fair value analyses in accordance with ASC 805.

Equity-Based Compensation (ASC 718)

Valuation of stock options, RSUs, profits interests, and market- or performance-based awards using Monte Carlo or option pricing methodologies.

Under ASC 718, entities issuing equity-based compensation are required to recognize compensation expense over the requisite service or performance period, based on the grant-date fair value of the award. Equity-based compensation arrangements can take many forms and include various vesting conditions. The most common awards include time-based stock options and restricted stock units (RSUs). Other arrangements may include stock appreciation rights (SARs), profits interest units, employee stock purchase plans, and long-term incentive plans (LTIPs). Awards that are settled in cash or do not meet equity classification are treated as compensation liabilities and remeasured at fair value each reporting period until settlement. Performance-based and market-based awards represent more complex structures, often tied to metrics such as internal rate of return (IRR), profitability targets, or total shareholder return (TSR) relative to a peer group or benchmark index. These awards typically require advanced valuation techniques—most commonly a Monte Carlo simulation—to capture the probability of vesting and a range of potential future equity values. Rivem Consulting assists clients in valuing equity-based compensation in accordance with ASC 718, providing robust fair value analyses and supportable documentation for audit and reporting purposes.

Impairment of Assets (IAS 36)

Annual or event-driven testing of cash-generating units (CGUs) to determine whether the carrying amount exceeds fair value.

IAS 36 provides guidance on identifying and measuring the impairment of non-financial assets. Entities are required to assess at each reporting date whether there are indicators that an asset or cash-generating unit (CGU) may be impaired. If such indicators exist, the recoverable amount of the asset is estimated, defined as the higher of its Value in Use—the present value of expected future cash flows from the asset—and its Fair Value less Costs of Disposal (FVLCOD).

The carrying amount of the asset is then compared to the recoverable amount, and any excess is recognized as an impairment loss in the financial statements. Key considerations include expected future cash flows, discount rates, and market-based evidence of fair value. In certain situations, it may be appropriate to bypass preliminary assessments and proceed directly to fair value measurements, particularly when robust market data is available.

Rivem Consulting assists clients in performing IAS 36 impairment analyses, providing detailed fair value assessments, along with supporting documentation for financial reporting and audit purposes.

Business Combination (IFRS 3)

Allocation of purchase consideration among identifiable tangible and intangible assets and liabilities acquired in a business combination.

Under IFRS 3, entities are required to account for business combinations using the acquisition method, which involves identifying the acquirer, determining the acquisition date, and recognizing and measuring the identifiable assets acquired, liabilities assumed, and any non-controlling interest at fair value. Goodwill is recognized to reflect the excess of the purchase consideration over the net fair value of the acquired net assets.

The scope of the analysis often includes valuation of tangible and intangible assets, as well as contingent consideration, if applicable. Intangible assets may include customer relationships, trade names and trademarks, developed technology, intellectual property, and other types of intangible assets. Contingent consideration is generally valued using probability-weighted discounted cash flow methods, option pricing methodologies, or Monte Carlo simulations, depending on the complexity of the terms.

Rivem Consulting assists clients in performing IFRS 3 business combination analyses and purchase price allocations, providing comprehensive fair value assessments, documentation, and support for audit and financial reporting purposes.

SPAC & IPO Readiness Valuation Support

Valuations for SPAC mergers or reverse mergers, pre-IPO equity conversions, compensation expense recognition, and disclosure readiness.

Preparing for an IPO or SPAC merger or reverse merger requires a comprehensive understanding of valuation, financial reporting, and regulatory expectations. Both traditional IPOs and de-SPAC transactions demand rigorous valuation analyses to ensure compliance with SEC, PCAOB, and GAAP (or IFRS) requirements.

Key areas of focus include valuation of equity instruments (ASC 718 / IFRS 2), preferred and common stock allocations (ASC 820), purchase price allocations (ASC 805 / IFRS 3), and goodwill or intangible asset impairment testing (ASC 350 / IAS 36). SPAC transactions often involve additional complexities, such as the fair value measurement of warrants, earnouts, and redemption features under ASC 480 and ASC 815, requiring advanced valuation techniques.

Rivem Consulting assists clients throughout the IPO and de-SPAC process — from pre-transaction planning and cap table analysis to post-merger financial reporting and valuation support. Our team helps management identify potential valuation and accounting considerations early, ensuring a smoother transition to public-company readiness and compliance.

Portfolio Valuation Service

Independent valuation of private equity and venture capital portfolios in accordance with ASC 820 and IFRS 13, supporting financial reporting and investor transparency.

Private equity firms, venture capital funds, and other investment entities are required to periodically measure and report the fair value of their portfolio investments in accordance with ASC 820 – Fair Value Measurement and IFRS 13. Portfolio valuations are essential for financial reporting, investor reporting, fund audits, and regulatory compliance.

Valuing private company investments requires the application of appropriate methodologies, such as the market approach, income approach (DCF), or option-pricing models, depending on the stage and structure of each investment. Factors such as recent transactions, capital structure, preferred rights, and market conditions must be carefully evaluated to ensure fair and consistent measurement across the portfolio.

Rivem Consulting provides independent, defensible, and transparent portfolio valuations for investment funds and asset managers. Our analyses adhere to recognized valuation standards and best practices, supporting both GAAP and IFRS reporting requirements.