Preparing a business for a carve-out, spin-off and/or sale is a complex exercise that requires effective planning and strong execution. Typically, carve-out financial statements are the foundation from which all other deal related financial information is either derived from or reconciled to, thereby supporting various financial information needs of multiple transaction participants. Time and time again we hear that preparing financial information for the business to be divested is one of the key and most complex issues they face in executing a sale or spin-off of a business.
Critical to any carve-out process, including the spin-off of a subsidiary, are deep technical knowledge and analytical skills around not just the tactical extraction and separation process, but also the various regulatory and accounting requirements to be addressed in executing the transaction. Having a robust carve-out process that is manageable, flexible, scalable and addresses the multiple forms a divestiture can take, enables organizations to drive quality, efficiency and value into the deal process.
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First and foremost, preparers of carve-out financial statements for taxable entities must comply with the Income Tax Code.