1210001 Informal Interpretation

Date:
Rule:
802.4
Staff:
Michael Verne
Response/Comments:

  - You have to value the intangible assets as part of an ongoing business. We have had this question come up quite a bit lately. I think some advice has been misinterpreted. We have said that you can allocate a portion of the intangibles to exempt assets (if appropriate), which would make the intangibles exempt as well. However, you must take into account any intangible assets associated with the non-exempt assets.  K Walsh concurs.

Question

From:

(Redacted)

Sent:

Monday, October 01, 2012 3:14 PM

To:

Verne, B. Michael

Subject:

802.4 Question

HiMike, I hope you got to enjoy the beautiful weather this weekend. This is a802.4 question.

Facts

1. A will acquire all of the outstandingequity of B for approximately $300 million. B is an IT company.

2. B has approximate $30 million of totalassets.

3. B's assets include approximately $16million in cash and cash equivalents and approximately $1 million in preparedexpenses.

4. B has approximately $4 million inreceivables and $9 million in other assets. So a total of approximately $13million in non-exempt assets.

Question

1.To determine the fair market value of the non-exempt assets must A value theassets as part of an ongoing business enterprise or determine what athird-party purchaser would pay in cash today to acquire only the non-exemptassets (not the exempt assets or B's employee's, customer relationships, etc.)?

Manythanks as always for your help.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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