TOP was engaged by a U.S.-based waterworks parts and castings manufacturer and their private equity firm sponsor to value certain tangible and intangible assets acquired as part of a taxable business combination. The transaction involved the acquisition of the target business' full product line of pumps for the residential and agricultural markets.

Tangible assets acquired and included in the scope of our analysis comprised of various classes of inventory, metal cutting machinery, testing equipment, various tools, molds, and dies, and other miscellaneous personal property. The raw materials inventory included in the scope of our analysis was valued using the replacement cost method under the cost approach, whereas the finished goods and work-in-progress inventory was valued using the top-down method under the income and market approaches. The fair value of machinery and equipment acquired as part of the transaction was estimated using the indirect method of the cost approach. Our client elected to take the private company election in accordance with ASC 805-20-25-30, with the remaining intangible assets scope for our engagement consisting of certain limited-term trademark/trade name use licenses, acquired trademarks/trade names, and technical know-how. The acquired trade name/trademark assets and technical know-how were valued using the relief-from-royalty method under the income approach.

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