Acquisition Adjustment

DEFINITION of 'Acquisition Adjustment'

The difference between the price an acquiring company pays to purchase a target company and the net original cost of the target utility company's assets. An acquisition adjustment is the premium paid for acquiring a company more than its tangible assets or book value.


Also known as "goodwill."

BREAKING DOWN 'Acquisition Adjustment'

Reasons why a company may want to pay more than the net tangible assets of another firm include the brand and other intangible assets that provide value to the firm. These can include patents, good customer relations, etc. All of this information can be found on the company's balance sheet.

RELATED TERMS
  1. Acquisition Premium

    The difference between the estimated real value of a company ...
  2. Acquisition Accounting

    A set of formal guidelines describing how assets, liabilities, ...
  3. Net Tangible Assets

    Calculated as the total assets of a company, minus any intangible ...
  4. Price to Tangible Book Value - ...

    A valuation ratio expressing the price of a security compared ...
  5. Tangible Asset

    Assets that have a physical form. Tangible assets include both ...
  6. Identifiable Asset

    An asset of an acquired company that can be assigned a fair value ...
Related Articles
  1. Investing Basics

    Explaining Net Tangible Assets

    Net tangible assets is a company’s total assets subtracting both intangible assets (such as goodwill and intellectual property) and total liabilities.
  2. Economics

    Explaining Tangible Net Worth

    Tangible net worth is determined by taking total assets, then subtracting liabilities and intangible assets.
  3. Entrepreneurship

    How to Calculate Your Tangible Net Worth

    Your net worth can be calculated with a simple equation.
  4. Professionals

    Balance Sheet Components - Assets

    CFA Level 1 - Balance Sheet Components - Assets. Learn about the different types of assets. A top down approach into the components of long-term and current assets.
  5. Professionals

    Natural Resource Assets

    CFA Level 1 - Natural Resource Assets. Discusses accounting for intangible assets, such as good will. Explains amortization and depreciation rules for intangibles assets.
  6. Personal Finance

    What Investors Can Learn From M&A Payment Methods

    How a company pays in a merger or acquisition can reveal a lot about the buyer and seller. We tell you what to look for.
  7. Fundamental Analysis

    What's a Tangible Asset?

    Tangible assets are property owned by a business that can be touched -- they physically exist. Examples include furniture and fixtures, computer hardware, delivery equipment, leasehold improvements ...
  8. Markets

    Investment Valuation Ratios: Price/Book Value Ratio

    By Richard Loth (Contact | Biography)A valuation ratio used by investors which compares a stock's per-share price (market value) to its book value (shareholders' equity). The price-to-book value ...
  9. Investing

    What's an Acquisition?

    In corporate terms, an acquisition is the purchase of a company or the division of a company. Some acquisitions are paid in cash, while others are paid with a combination of cash and the acquiring ...
  10. Options & Futures

    Mergers and Acquisitions: Valuation Matters

    Investors in a company that are aiming to take over another one must determine whether the purchase will be beneficial to them. In order to do so, they must ask themselves how much the company ...
RELATED FAQS
  1. Why is the amount of net tangible assets an important benchmark?

    Find out more about net tangible assets, how to calculate net tangible assets and the importance of net tangible assets and ... Read Answer >>
  2. How are net tangible assets calculated?

    Learn about net tangible assets, what it measures and how to calculate a company net tangible assets using examples. Read Answer >>
  3. What happens to the stock prices of two companies involved in an acquisition?

    When a firm acquires another entity, there usually is a predictable short-term effect on the stock price of both companies. ... Read Answer >>
  4. What is the difference between goodwill and tangible assets?

    Find out about tangible and intangible assets, and understand how intangible assets, such as goodwill, do not take physical ... Read Answer >>
  5. What is the difference between tangible and intangible assets?

    Discover the difference between tangible assets and intangible assets and the types of assets that are in each. Additionally, ... Read Answer >>
  6. What is an aggregate limit and what type of insurance is it usually associated with?

    Understand why tangible assets are important to a company. Learn why the ownership of a tangible asset has benefits as well ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center