{"ok":true,"canonical_url":"https://dealroom.so/glossary/purchase-price-allocation","api_url":"https://dealroom.so/api/public/glossary/purchase-price-allocation","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"purchase-price-allocation","term":"Purchase price allocation","aka":"PPA","group":"Reading the business","definition":"This is how the total purchase price of a business is legally assigned to its various assets (e.g., equipment, inventory, goodwill) for tax purposes. It impacts future depreciation and tax liabilities for you.","what_it_means":"Your attorney and accountant will help you negotiate and structure the PPA with the seller. This allocation determines how much you can depreciate over time, impacting your future tax deductions. Goodwill is often a large component in small business acquisitions, but other assets like equipment or inventory have different depreciation schedules. Get this right; it's significant.","url":"https://dealroom.so/glossary/purchase-price-allocation","official_sources":[],"related":[{"slug":"asset-purchase","term":"Asset purchase","url":"https://dealroom.so/glossary/asset-purchase"},{"slug":"goodwill","term":"Goodwill","url":"https://dealroom.so/glossary/goodwill"},{"slug":"business-valuation","term":"Business valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"tax-return","term":"Tax return","url":"https://dealroom.so/glossary/tax-return"}],"related_questions":[{"question":"What information is required to document the purchase price allocation for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/what-information-is-required-to-document-the-purchase-price-allocation-for-a-business-acqu"},{"question":"How does the SBA ensure the purchase price allocation to goodwill is reasonable for an acquisition?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-ensure-the-purchase-price-allocation-to-goodwill-is-reasonable-for-an-acq"},{"question":"How does a lender evaluate the reasonableness of the purchase price allocation for a 7(a) acquisition?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-evaluate-the-reasonableness-of-the-purchase-price-allocation-for-a-7-a-a"},{"question":"What if the business valuation is insufficient to support the purchase price?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-valuation-is-insufficient-to-support-the-purchase-price"},{"question":"What happens if my business valuation comes in lower than the purchase price?","url":"https://dealroom.so/sba-loans/basics/what-happens-if-my-business-valuation-comes-in-lower-than-the-purchase-price"},{"question":"How is the purchase price determined for an SBA 7(a) partner buyout?","url":"https://dealroom.so/sba-7a/questions/how-is-the-purchase-price-determined-for-an-sba-7-a-partner-buyout"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Purchase price allocation","url":"https://dealroom.so/glossary/purchase-price-allocation","source_type":"DealRoom Data"}}