Purchase method is one of the accounting methods to evaluate the assets and liabilities of the company to be merged at the time of business combination such as M & A. Purchase means “to buy” in English, and Purchase method is a method of recording the difference between the net assets of the acquisition target company and the purchase price as goodwill. In accounting related to M & A, there are pooling method and purchase method. Pooling is the accounting process on the premise that mergers between companies are carried out on an equal footing. It integrates in a form of skidding by maintaining the figures of mutual general ledger such as accumulated depreciation and loan loss reserve. Because the asset value will be higher than the pooling pool ownership method that evaluates assets and liabilities of the company to be merged at a low price, the cost burden will increase for the acquired company. International accounting standards prohibit the pooling method of ownership and make purchase method a standard accounting method. Japan also decides to adopt the purchase method in principle by restricting the pooling method of ownership in the business combination accounting standard newly applied for the purpose of consistency with international accounting standards. The reason is that it is necessary to decide which business combination transaction is called merger, and most of M & A is regarded as an economic transaction that one company acquires the other company.
What is a scheme to succeed with M & A with goodwill cost added?
In M & A, it is a thing to acquire a company that has a potential but has no profit, such as a company that has weak management skills despite having advanced technology, it has a sense of umami. Even if such goods are not profitable and the stock price is also cheap, even if the goodwill cost is added and depreciation is made within the appropriate period by the purchase law, if you change to efficient management after acquisition, you will demonstrate the potential capacity The company that acquired it will gain a profit. In addition, there are cases where bargain purchase that acquires in M & A company is cheaper than net asset value occurs. Even if the company has a net asset of 5 billion yen, if the total market capitalization is 4 billion yen, it will be able to acquire the net assets by 1 billion yen or less. Therefore, in this case the market is evaluating the profitability of the company low. In the Japanese stock market, there are many listed companies whose stock price per capita net asset multiplier is less than 1, so the acquirers can think that it is a market that is easy to play bargain purchases by taking advantage of low standards.