Recently released accounting standards introduce pervasive changes to how companies track and report M&A. Two deserve particular attention: expensing transaction and restructuring costs, and the broader use of fair value concepts. These two changes will significantly impact financials, both at the time of the deal and after, as they will dilute earnings and reduce earnings predictability.
Highlights:
A pair of new accounting and reporting standards, impacting M&A, will go into effect for US companies in 2009
The new standards, applicable to both US and international companies, will increase transparency and global comparability
The new scorecard doesn’t change the rationale for doing a particular deal, but it will impact how deals are designed and reported
Communication with investors will be key to easing the transition
Planning now improves the ability to adapt existing processes and practices
