Mergers & acquisitions
Content on this page pertains to the financial reporting aspects of a merger or acquisition. Please visit PwC’s Acquisitions page for other key elements to consider.
Mergers & acquisitions can present significant accounting and financial reporting requirements to a company throughout the entire transaction lifecycle. These requirements are driven by: (1) a buyer's internal financial needs, (2) technical accounting and reporting requirements, and (3) SEC regulations. Understanding these requirements up front allows a company to appropriately prepare and thereby execute a successful transaction.
As transactions become more and more global, the associated complexities and challenges increase significantly. Identifying and understanding these considerations is critical, enabling companies to ensure that the right structures are put into place and that the financial, legal and regulatory requirements are satisfied in an efficient and effective manner.
Undertaking M&A transactions requires a deep understanding of the various regulatory and reporting requirements which can have a significant impact on the transaction timeline. Proactively addressing these requirements and ensuring that reporting and capital raising milestones can be achieved are critical to the overall success of the deal.
Neil Dhar, Partner
Impacts to companies:
- Transactions deemed to be "significant" require a buyer to have historical financial statements of the target available for filing with the SEC.
- Buyers may need to file pro-forma financial statements reflecting the acquisition and other related transactions within a specific timeframe.
- An acquisition of a company that applies a different basis of accounting (e.g., IFRS) requires a conversion to conform the accounting principles to the buyer.
- A financing transaction may be necessary, which will need to be efficiently executed to meet the overall deal timeline.
- Companies need to consider the key integration activities that will need to take place post-acquisition to maintain and maximize deal value.
What companies should do:
- Develop a timeline incorporating all of the accounting and reporting obligations associated with the transaction.
- Understand the financing structure and reporting requirements and how that fits with the overall deal timeline.
- Assess the availability of historical financial statements of the target.
- Begin the evaluation of accounting policy differences and purchase allocation implications early.
- Contemporaneous evaluation of accounting, financial reporting and tax consequences of structural alternatives.