Purchase Price Allocation

August 24, 2013  |     |     |   0 Comment

For tax purposes, when a buyer acquires a website or business, the acquirer sometimes allocates the purchase price to various assets (and liabilities, if applicable) acquired from the seller. This is called purchase price allocation.

For example, the $1M purchase price of a website may be allocated as $200,000 to the domain name, $600,000 to certain website assets, $100,000 to goodwill, and $100,000 to the non-compete clause. Of course, this example is simply for educational purposes. Always consult a tax expert for advice on a specific situation.

Author: 

Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.

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