Figure BCG 4-2 includes a list of intangible assets by major category and identifies whether the asset would typically meet the contractual-legal criterion or the separability criterion in accordance with ASC 805-20-55-11 through ASC 805-20-55-45. In certain cases, an intangible asset may meet both criteria. However, the table highlights the primary criterion under which the specific intangible asset would be recognized. The list is not intended to be all-inclusive; therefore, other acquired intangible assets might also meet the criteria for recognition apart from goodwill.
Figure BCG 4-2
1 In most cases, such intangible assets would be favorable or unfavorable contracts. See BCG 4.3.3.5 for additional information.
2 Acquired lease contracts of a lessee that are favorable or unfavorable are not recorded as a separate intangible. See BCG 4.3.3.7 for further information on lease intangibles.
3 Only in certain circumstances. See BCG 4.3.3.3 for further information. 4 Only in certain circumstances. See BCG 4.3.3.2 for further information.Marketing-related intangible assets are primarily used in the marketing or promotion of products or services. They are typically protected through legal means and, therefore, generally meet the contractual-legal criterion for recognition separately as an intangible asset.
Trademarks, trade names, and other marks are often registered with governmental agencies or are unregistered, but otherwise protected. Whether registered or unregistered, but otherwise protected, trademarks, trade names, and other marks have some legal protection and would meet the contractual-legal criterion. If trademarks or other marks are not protected legally, but there is evidence of similar sales or exchanges, the trademarks or other marks would meet the separability criterion.
A brand is the term often used for a group of assets associated with a trademark or trade name. An acquirer can recognize a group of complementary assets, such as a brand, as a single asset apart from goodwill if the assets have similar useful lives and either the contractual-legal or separable criterion is met. See BCG 4.4 for further information on complementary intangible assets and grouping of other intangible assets.
Trade dress refers to the unique color, shape, or packaging of a product. If protected legally (as discussed above in relation to trademarks), then the trade dress meets the contractual-legal criterion. If the trade dress is not legally protected, but there is evidence of sales of the same or similar trade dress assets, or if the trade dress is sold in conjunction with a related asset, such as a trademark, then it would meet the separability criterion.
Newspaper mastheads are generally protected through legal rights, similar to a trademark and, therefore, would meet the contractual-legal criterion. If not protected legally, a company would look at whether exchanges or sales of mastheads occur to determine if the separability criterion is met.
Internet domain names are unique names used to identify a particular internet site or internet address. These domain names are usually registered and, therefore, would meet the contractual-legal criterion found in ASC 805-20-55-19.
Noncompetition (“noncompete”) agreements are legal arrangements that generally prohibit a person or business from competing with a company in a certain market for a specified period of time. An acquiree may have preexisting noncompete agreements in place at the time of the acquisition. As those agreements arise from a legal or contractual right, they would meet the contractual-legal criterion and represent an acquired asset that would be recognized as part of the business combination. The terms, conditions, and enforceability of noncompete agreements may affect the fair value assigned to the intangible asset but would not affect their recognition.
Other payments made to former employees that may be described as noncompete payments might actually be compensation for services in the postcombination period. See BCG 3 for further information on accounting for compensation arrangements.
A noncompete agreement negotiated as part of a business combination generally prohibits former owners or key employees from competing with the combined entity. The agreement typically covers a set period of time that commences after the acquisition date or termination of employment with the combined entity. A noncompete agreement negotiated as part of a business combination will typically be initiated by the acquirer to protect the interests of the acquirer and the combined entity. Transactions are to be treated separately if they are entered into by or on behalf of the acquirer or primarily for the benefit of the acquirer. As such, noncompete agreements negotiated as part of a business combination should generally be accounted for as transactions separate from the business combination. For example, if an entity pays $20 million to acquire a target, including a noncompete agreement with a fair value of $2 million, the noncompete agreement should be recognized separately at a fair value of $2 million. The remaining purchase price ($18 million) will be allocated to the net assets acquired, excluding the noncompete agreement.
A noncompete agreement will normally have a finite life requiring amortization of the asset. The amortization period should reflect the period over which the benefits from the noncompete agreement are derived. Determining the period is a matter of judgment in which all terms of the agreement, including restrictions on enforceability of the agreement, should be considered.
Artistic-related intangible assets are creative assets that are typically protected by copyrights or other contractual and legal means. Artistic-related intangible assets are recognized separately in accordance with ASC 805-20-55-30 if they arise from contractual or legal rights, such as copyrights. Artistic-related intangible assets include (1) plays, operas, ballets; (2) books, magazines, newspapers, other literary works; (3) musical works, such as compositions, song lyrics, advertising jingles; (4) pictures and photographs; and (5) video and audiovisual material, including motion pictures or films, music videos, and television programs. Copyrights can be assigned or licensed, in whole or in part, to others. A copyright-protected intangible asset and related assignments or license agreements may be recognized as a single complementary asset as long as the component assets have similar useful lives. See BCG 4.4 for further information on grouping of complementary assets.
Contract-based intangible assets represent the value of rights that arise from contractual arrangements. Customer contracts are one type of contract-based intangible assets. Contract-based intangible assets include (1) licensing, royalty, and standstill agreements; (2) advertising, construction, management, service, or supply contracts; (3) construction permits; (4) franchise agreements; (5) operating and broadcast rights; (6) contracts to service financial assets; (7) employment contracts; (8) use rights; and (9) lease agreements. Contracts whose terms are considered at-the-money, as well as contracts in which the terms are favorable relative to market may also give rise to contract-based intangible assets. If the terms of a contract are unfavorable relative to market, the acquirer recognizes a liability assumed in the business combination. See BCG 4.3.3.5 for further information on favorable and unfavorable contracts.
Contracts to service financial assets may include collecting principal, interest, and escrow payments from borrowers; paying taxes and insurance from escrowed funds; monitoring delinquencies; executing foreclosure, if necessary; temporarily investing funds pending distribution; remitting fees to guarantors, trustees and others providing services; and accounting for and remitting principal and interest payments to the holders of beneficial interests in the financial assets.
Although servicing is inherent in all financial assets, it is not recognized as a separate intangible asset unless (1) the underlying financial assets (e.g., receivables) are sold or securitized and the servicing contract is retained by the seller; or (2) the servicing contract is separately purchased or assumed. ASC 860-50, Servicing Assets and Liabilities, provides guidance on the accounting for service contracts.
If mortgage loans, credit card receivables, or other financial assets are acquired in a business combination along with the contract to service those assets, then neither of the above criteria has been met and the servicing rights will not be recognized as a separate intangible asset. However, the fair value of the servicing rights should be considered in measuring the fair value of the underlying mortgage loans, credit card receivables, or other financial assets.
Employment contracts may result in contract-based intangible assets or liabilities according to ASC 805-20-55-36. An employment contract may be above or below market in the same way as a lease or a servicing contract. However, the recognition of employment contract intangible assets and liabilities is rare in practice. Employees can choose to leave employment with relatively short notice periods, and employment contracts are usually not enforced. In addition, the difficulty of substantiating market compensation for specific employees may present challenges in measuring such an asset or liability.
An exception might be when a professional sports team is acquired. The player contracts may well give rise to employment contract intangible assets and liabilities. The athletes often work under professional restrictions, such that they cannot leave their contracted teams at will and play with another team to maintain their professional standing. Player contracts may also be separable, in that they are often the subject of observable market transactions.
Preexisting employment contracts in the acquired business may also contain noncompetition clauses. These noncompetition clauses may have value and should be assessed separately as intangible assets. See BCG 4.3.1.3 for further information on noncompetition agreements.
Assembled workforceAn assembled workforce is defined in ASC 805-20-55-6 as an existing collection of employees that permits an acquirer to continue to operate from the date of the acquisition. Although individual employees may have employment agreements with the acquiree, which may, at least theoretically, be separately recognized and measured as discussed above, the entire assembled workforce does not have such a contract. Therefore, an assembled workforce does not meet the contractual-legal criterion. Furthermore, an assembled workforce is not considered separable because it cannot be sold or transferred without causing disruption to the acquiree’s business. An assembled workforce is not an identifiable intangible asset that is to be separately recognized and, as such, any value attributable to the assembled workforce is included in goodwill.
An intangible asset may be recognized for an assembled workforce acquired in an asset acquisition. However, an assembled workforce may be indicative that a business was acquired, as discussed in BCG 1. See PPE 2 for information on the accounting for an assembled workforce in an asset acquisition.
The intellectual capital that has been created by a skilled workforce may be embodied in the fair value of an entity’s other intangible assets that would be recognized at the acquisition date as the employer retains the rights associated with those intangible assets. For example, in measuring the fair value of proprietary technologies and processes, the intellectual capital of the employee groups embedded within the proprietary technologies or processes would be considered.
Collective bargaining agreementsA collective bargaining or union agreement typically dictates the terms of employment (e.g., wage rates, overtime rates, and holidays), but does not bind the employee or employer to a specified duration of employment. The employee is still an at-will employee and has the ability to leave or may be terminated. Therefore, similar to an assembled workforce, typically no intangible asset would be separately recognized related to the employees covered under the agreement. However, a collective bargaining agreement of an acquired entity may be recognized as a separate intangible asset or liability if the terms of the agreement are favorable or unfavorable when compared to market terms.
Use rights, such as drilling, water, air, mineral, timber cutting, and route authorities’ rights, are contract-based intangible assets. Use rights are unique in that they may have characteristics of both tangible and intangible assets. Use rights should be recognized based on their nature as either a tangible or intangible asset. For example, mineral rights, which are legal rights to explore, extract, and retain all or a portion of mineral deposits, are tangible assets in accordance with ASC 805-20-55-37.
An intangible asset (or a liability) may be recognized at the acquisition date for the difference between the fair value of all assets and liabilities arising from the rights and obligations of any acquired insurance and reinsurance contracts and their carrying amounts. See IG 12 for further information on the accounting for insurance and reinsurance contract intangible assets acquired in a business combination.
This section addresses acquired contracts that are favorable or unfavorable, except for lease contracts, which are discussed in BCG 4.3.3.7. Intangible assets or liabilities may be recognized for certain off balance sheet contracts whose terms are favorable or unfavorable compared to current market terms. In making this assessment, the terms of a contract should be compared to market prices at the date of acquisition to determine whether an intangible asset or liability should be recognized. If the terms of an acquired contract are favorable relative to market prices, an intangible asset is recognized. On the other hand, if the terms of the acquired contract are unfavorable relative to market prices, then a liability is recognized. The FASB has characterized the differences in contract terms relative to market terms as assets and liabilities, but these adjustments in value are unlikely to meet the definitions of an asset and liability. Within this guide, these adjustments are referred to as assets and liabilities for consistency with the treatment by the FASB.
A significant area of judgment in measuring favorable and unfavorable contracts is whether contract renewal or extension terms should be considered. Generally, an unfavorable contract would not be recorded as a result of a contract renewal or extension. The following factors should be considered in determining whether to include renewals or extensions:
Each arrangement is recognized and measured separately. The resulting amounts for favorable and unfavorable contracts are not offset.
Example BCG 4-4 and Example BCG 4-5 demonstrate the recognition and measurement of favorable and unfavorable contracts, respectively.
EXAMPLE BCG 4-4Company N acquires Company O in a business combination. Company O purchases electricity through a purchase contract, which is in year three of a five-year arrangement. At the end of the original term, Company O has the option at its sole discretion to extend the purchase contract for another five years. The annual cost of electricity per the original contract is $80 per year, and the annual cost for the five-year extension period is $110 per year. The current annual market price for electricity at the acquisition date is $200; and market rates are not expected to change during the original contract term or the extension period. For the purpose of this example, assume that Company N does not account for the contract as a derivative.
How should Company N account for the acquired favorable purchase contract? AnalysisCompany O’s purchase contract for electricity is favorable. Both the original contract and extension terms allow Company O to purchase electricity at amounts below the annual market price of $200. Because the contract terms are favorable based on the remaining two years of the original contractual term and the extension terms are favorable, Company N would likely consider the five-year extension term as well in measuring the favorable contract.
EXAMPLE BCG 4-5Company N acquires Company O in a business combination. Company O purchases electricity through a purchase contract, which is in year three of a five-year arrangement. At the end of the original term, Company O has the option at its sole discretion to extend the purchase contract for another five years. The annual cost of electricity per the original contract is $80 per year, and the annual cost for the five-year extension period is $110 per year. The current annual market price for electricity at the acquisition date is $50 per year and market rates are not expected to change during the original contract term or the extension period.
How should Company N account for the acquired unfavorable purchase contract? AnalysisCompany O’s purchase contract is unfavorable. Both the original contract and extension term require it to pay amounts in excess of the current annual market price of $50. While Company N would recognize and measure a liability for the two years remaining under the original contract term, the extension term would not be considered in measuring the unfavorable contract because Company N can choose not to extend the unfavorable contract.
The fair value of an intangible asset or liability associated with favorable and unfavorable contract terms would generally be determined based on present-value techniques. For example, the difference between the contract price and the current market price for the remaining contractual term, including any expected renewals, would be calculated and then discounted to arrive at a net present-value amount. The fair value of the intangible asset or liability would then be amortized over the remaining contract term, including renewals, if applicable.
At-the-money contracts should be evaluated for any intangible assets that may need to be separately recognized. At-the-money contract terms reflect market terms at the date of acquisition. However, the contract may have value for which market participants would be willing to pay a premium because the contract provides future economic benefits.
In assessing whether a separate intangible asset exists for an at-the-money contract, an entity should consider other qualitative reasons or characteristics, such as (1) the uniqueness or scarcity of the contract or leased asset; (2) the unique characteristics of the contract; (3) the efforts to date that a seller has expended to obtain and fulfill the contract; (4) the potential for future contract renewals or extensions; or (5) exclusivity. The existence of these characteristics may make the contract more valuable, resulting in market participants being willing to pay a premium for the contract.
A lease agreement represents an arrangement in which one party obtains the right to use an asset from another party for a period of time, in exchange for the payment of consideration. Lease arrangements that exist at the acquisition date may result in the recognition of various assets and liabilities, including separate intangible assets based on the contractual-legal criterion. The type of lease (e.g., operating lease) and whether the acquiree is the lessee or the lessor to the lease will impact the various assets and liabilities that may be recognized in a business combination.
A lessee will record right-of-use assets and lease liabilities on their balance sheet for all leases, unless the lessee makes an accounting policy election that exempts the measurement and recognition of short-term leases. A lessee will record the favorable or unfavorable terms of the lease in the right-of-use asset. A lessee will classify leases as operating or finance leases. Operating leases will be reported on a lessee’s balance sheet.
A lessor will classify leases as operating, sales-type, or direct financing. See LG 3 for further information on lease classification for lessees and lessors. Acquiree is a lesseeLeases are one of the limited exceptions to the recognition (ASC 805-20-25-17) and measurement (ASC 805-20-30-12) principles under ASC 805 and follow specific guidance for acquired leases under ASC 842 and ASC 805. Furthermore, paragraph BC416 in the Basis for Conclusions of ASU 2016-02 acknowledged that the acquiree’s right-of-use assets and lease liabilities would not be recorded at fair value, although the net carrying amount for the lease will approximate the fair value at the date of acquisition.
In a business combination, ASC 842-10-55-11 requires that the acquirer retain the acquiree’s previous lease classification, unless the lease is modified. If the lease is modified and the modification is not accounted for as a separate new lease, the modification is evaluated in accordance with the guidance on lessee lease modifications. See LG 5.2 for further information.
This means that even when the assumptions used to measure the lease liability indicate that the lease would be classified differently, the acquirer is required to retain the classification used by the acquiree. For example, for a new lease, a purchase option that is reasonably certain of exercise would result in the lease being classified as a finance lease. However, if the acquiree classified the lease as an operating lease because, prior to the acquisition date, the purchase option was not reasonably certain of exercise, the acquirer is required to retain the acquiree’s lease classification as an operating lease. The acquirer would include the exercise of the purchase option when measuring the lease liability and right-of-use asset. The acquirer would also consider the purchase option when determining the useful life of the right-of-use asset (i.e., the useful life of the underlying leased asset).
ASC 805-20-30-24 provides guidance on the recognition and measurement of leases acquired in a business combination in which the acquiree is the lessee. This guidance applies to operating and finance leases.
For leases in which the acquiree is a lessee, the acquirer shall measure the lease liability at the present value of the remaining lease payments, as if the acquired lease were a new lease of the acquirer at the acquisition date. The acquirer shall measure the right-of-use asset at the same amount as the lease liability as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms.
The acquired lease liability should be measured as if it were a new lease following the guidance under ASC 842 (e.g., reassessment of the lease term, discount rate, lease payments, purchase options), except when taking into account the lease classification requirements under ASC 842-10-55-11.
The right-of-use asset is measured at the amount of the lease liability and adjusted by any favorable or unfavorable terms of the lease as compared to market terms. When determining whether there are any favorable or unfavorable terms of a lease that require recognition, the acquirer should consider all of the terms of the lease (e.g., contractual rent payments, renewal or termination options, purchase options, lease incentives). For example, assume an acquired lease includes an option to purchase the underlying asset for $15 and the option has a fair value of $4 at the acquisition date. If the purchase option is reasonably certain of being exercised, the purchase option payment of $15 would be included in the lease payments used to measure the lease liability and right-of-use asset. Assume that after including the purchase option of $15, the acquirer determines that the lease liability is $20. Besides the purchase option, the terms of the lease are determined to be at market. As such, the favorable terms of the lease are equal to the value of the purchase option of $4. The favorable terms of the lease would be recorded as an adjustment to the right-of-use asset and the value of the right-of-use asset recorded in the acquisition would be $24. Refer to LG 3.4 and LG 4.2.1 for more information on the application of the reasonably certain threshold and the measurement of the lease liability, respectively.
If there is a renewal option that allows the lessee to renew with favorable lease terms (i.e., contractual rent payments are less than market rent), the renewal option should be considered in measuring the favorable terms of the lease. Renewal options should also be considered when determining the lease term. When renewal options are reasonably certain of being exercised, the lease term should include the additional term provided by the renewal option. The contractual rent payments made during the lease term will be included when measuring the lease liability and right-of-use asset.
If an option (e.g., renewal option, termination option, purchase option) is not reasonably certain of being exercised, the lease term used to determine the lease liability and right-of-use asset would not be impacted by the option. However, when the option is not reasonably certain of being exercised, there would still be value associated with the option; this value would be included when determining any adjustment to the right-of-use asset for favorable or unfavorable terms of the lease.
When recording the right-of-use asset for an acquired finance lease, the acquirer does not record the right-of-use asset at the fair value of the underlying asset. Under the guidance in ASC 805-20-30-24, the fair value of a purchase option that is reasonably certain of exercise would be included as an adjustment to the right-of-use asset when recording the favorable terms of the lease. When there is an automatic transfer of title at the end of the lease, the fair value of the underlying asset would be included when recording the favorable or unfavorable terms of the lease.
When calculating the adjustment to the right-of-use asset for favorable or unfavorable terms of the lease, market participant assumptions should be used following the fair value principles of ASC 820. In calculating the fair value of the favorable or unfavorable terms of the lease, the discount rate applied should be that of a market participant which, would not necessarily be the same as the lessee’s incremental borrowing rate that was used to measure the lease liability. When the terms of the lease are above market (i.e., unfavorable to the lessee), the acquirer should use a discount rate that takes into consideration credit risk given that the unfavorable terms are similar to an acquired uncollateralized financing liability.
As discussed in ASC 805-20-25-28B, an acquirer in a business combination can make an accounting policy election to not measure or recognize leases that have a remaining lease term of 12 months or less at the acquisition date. In addition, under this policy election, the acquirer would not recognize an intangible asset if the terms of an operating lease are favorable relative to market terms or a liability if the terms are unfavorable relative to market terms. The election is made by class of underlying asset and is applicable to all of the company’s acquisitions. See LG 2.2.1 for information on the short-term lease measurement and recognition exemption.
There may also be value associated with an at-the-money lease contract depending on the nature of the leased asset (e.g., a lease of gates at an airport for which a market participant might be willing to pay for the lease even when the lease is at market terms). See BCG 4.3.3.6 for further information on at-the-money contracts.
Leasehold improvements of the acquired entity would be recognized as tangible assets on the acquisition date at their fair value. ASC 805-20-35-6 provides guidance on the amortization of leasehold improvements acquired in a business combination.
Leasehold improvements acquired in a business combination shall be amortized over the shorter of the useful life of the assets and the remaining lease term at the date of acquisition. However, if the lease transfers ownership of the underlying asset to the lessee, or the lessee is reasonably certain to exercise an option to purchase the underlying asset, the lessee shall amortize the leasehold improvements to the end of their useful life.
Acquiree is a lessor: operating leaseLeases are one of the limited exceptions to the recognition (ASC 805-20-25-17) and measurement (ASC 805-20-30-12) principles under ASC 805 and follow specific guidance for acquired leases under ASC 842 and ASC 805.
In a business combination, ASC 842-10-55-11 requires the acquirer to retain the acquiree’s previous lease classification, unless the lease is modified. If the lease is modified and the modification is not accounted for as a separate new lease, the modification is evaluated in accordance with the guidance on lessor lease modifications. See LG 5.6 for information.
If the acquiree is a lessor in an operating lease, the asset subject to the lease would be recognized and measured at fair value unencumbered by the related lease. In other words, the leased property (including any acquired tenant improvements) is measured at the same amount, regardless of whether an operating lease is in place. In accordance with ASC 805-20-25-12, an intangible asset or liability may also be recognized if the lease contract terms are favorable or unfavorable as compared to market terms. In addition, in certain circumstances, an intangible asset may be recognized at the acquisition date in accordance with ASC 805-20-30-5 for the value associated with the existing lease (referred to as an “in-place” lease, as further discussed in this section) and for any value associated with the relationship the lessor has with the lessee. Further, a liability may be recognized for any unfavorable renewal options or unfavorable written purchase options if the exercise is beyond the control of the lessor.
If the lease is classified as an operating lease and provides for non-level rent payments, the acquiree will have recorded an asset or liability to recognize rent revenue on a straight-line basis. Such asset or liability would not be carried forward by the acquirer. Rather, the acquirer would recognize rent revenue prospectively on a straight-line basis. See BCG 2.5.17 for further information on deferred charges arising from leases when the acquiree is a lessor. Additionally, the presence of a straight-line asset or liability is presumed to be indicative of a favorable or unfavorable contract that should be recognized.
Intangible assets related to “in-place” leasesThere may be value associated with leases that exist at the acquisition date (referred to as “in-place” leases) when the acquiree is a lessor and leases assets through operating leases. That value may relate to the economic benefit of acquiring the asset or property with “in-place” leases, rather than an asset or property that was not leased. At a minimum, the acquirer would typically avoid costs necessary to obtain a lease, such as any sales commissions, legal, or other lease incentive costs. That value, in addition to any recognized customer-related intangible assets and favorable or unfavorable contract assets or liabilities, is typically recognized as a separate intangible asset in a business combination. Further, the underlying property subject to the operating leases would be measured at fair value, without regard to the underlying lease contracts.
Example BCG 4-6 illustrates the recognizable intangible and tangible assets related to operating leases of a lessor acquired in a business combination.
EXAMPLE BCG 4-6Company A, the lessor of a commercial office building subject to various operating leases, was acquired by Company G during 20X1 in a business combination. Included in the assets acquired is a building fully leased by third parties with leases extending through 20X9. As market rates have fluctuated over the years, certain of the leases are at above-market rates and others are at below-market rates at the acquisition date. All of the leases are classified as operating leases, as determined by the acquiree at lease commencement.
How would Company G measure and record the assets and liabilities related to the lease arrangements upon acquisition?
AnalysisUsing the acquisition method, Company G would consider the following in recognizing and measuring the assets and liabilities, if applicable, associated with the lease arrangements:
The acquired entity may also be a lessor in a lease other than an operating lease, such as a direct financing or sales-type lease. In those situations, the acquirer recognizes and measures its net investment in the lease in accordance with ASC 805-20-30-25, which will be equal to the sum of the lease receivable and the unguaranteed residual asset. In applying this guidance, the acquirer will need to determine the fair value of the net investment in the lease that takes into account the terms and conditions of the lease. The acquirer would incorporate into the fair value of the net investment in the lease any terms or conditions in the lease that are favorable or unfavorable (i.e., off market contract terms which could include rental payments, residual value guarantees, purchase options, renewal options, termination options, etc.). Therefore, the acquirer would not record a separate intangible asset or liability for any favorable or unfavorable terms of the lease.
An intangible asset may be recognized for any value associated with the relationship the lessor has with the lessee (e.g., customer or tenant relationships). Generally, we believe the value of an in-place lease is incorporated in the fair value of the net investment in the lease. However, we are aware of an alternative view in practice in which an in-place lease intangible asset is separately recorded.
Figure BCG 4-3 summarizes the typical items to consider in the recognition of assets and liabilities associated with lease arrangements in a business combination.
