Intuit, Inc.

by William E. Fruhan Jr.

Abstract

The merger of two computer software firms with very rapidly growing non-overlapping products makes great strategic sense, but presents difficult valuation and accounting problems. How can a firm pay $225 million to acquire another firm with negligible current earnings, and which promises to produce an immediate $150 MM one-time charge to earnings which will be followed over a five-year period by $65 million of amortization of intangible assets?

Keywords: Valuation; Software; Mergers and Acquisitions; Accounting; Financial Strategy; Goodwill Accounting; Corporate Finance; Information Technology Industry; United States;