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Stout's 2026 Purchase Price Allocation Study Overview

On September 21, 2026, Stout unveiled its latest research titled the 2026 Purchase Price Allocation Study. This comprehensive study meticulously analyzes purchase price allocations that public companies declare in their SEC filings. One intriguing outcome of this study is the noticeable reduction in the number of non-bargain purchase transactions recorded in 2025, accompanied by an increase in the prevalence and importance of contingent consideration in these deals.

Key Findings:

In conducting this research, Stout reviewed 22,953 10-K and 10-Q filings from the previous year, which encapsulates the state of M&A (mergers and acquisitions) in various sectors. Here are some significant findings from the study:

• - The overall transaction volume experienced a decline of about 9%, with 725 transactions recorded in 2025 compared to 800 in the preceding year. This downturn hints at a cautious environment within the acquisition landscape, perhaps reflecting broader economic conditions.
• - Notably, the presence of contingent consideration grew significantly, comprising 23.7% of transactions in 2025, up from 22.3% in 2024. For those deals that included contingent consideration, it accounted for an average of 20.3% of the enterprise value, marking an increase from 17.4% in the prior year.
• - When examining the Consumer Discretionary sector, the number of deals dwindled from 82 to 63; however, the median enterprise value saw a remarkable surge from $27 million to $92 million. This contrast illustrates that while fewer deals were made, those that did occur were of significantly higher value.
• - The Information Technology sector countered the general downward trend, posting an increase in deal count from 177 to 191, alongside a boost in median enterprise value that rose from $63 million to $79 million. Correspondingly, the median goodwill as a percentage of enterprise value escalated from 62% to 69%.

Sector-Specific Trends

The analysis reveals that industry dynamics played a vital role in shaping these figures. Sectors such as Consumer Staples, Health Care, and Information Technology witnessed an uptick in transaction counts, while sectors like Communication Services, Consumer Discretionary, Energy, and Industrials faced declines. An intriguing aspect lies in how goodwill percentages varied across industries, as it increased in sectors such as Energy, Health Care, Industrials, Information Technology, and Materials, while it decreased in spaces like Communication Services, Consumer Discretionary, and Consumer Staples.

The Growing Complexity of Contingent Consideration

Justin Pogge, Managing Director at Stout, remarked on the implications of the rising use of contingent consideration, highlighting that it could complicate both deal valuation and associated purchase accounting. As a greater portion of transaction value increasingly relies on future performance metrics, it's crucial for companies to scrutinize the foundational assumptions guiding these arrangements meticulously. This scrutiny ensures a clear understanding of how these assumptions shape fair value measurements within deals.

Conclusion

Stout’s 2026 Purchase Price Allocation Study sheds light on the evolving landscape of mergers and acquisitions against a backdrop of fewer transactions and a nuanced approach to deal structuring. By providing a detailed analysis of sector-specific trends and the complexities introduced by contingent consideration, this study serves as a valuable resource for professionals navigating the intricacies of purchase price allocations across various industries. As the research indicates, appreciating these dynamics is essential for developing sound valuation strategies and informed investment decisions.

For further insights, professionals and interested parties are encouraged to delve into the full findings of the 2026 Stout Purchase Price Allocation Study on their official website stout.com.