Business combination accounting

The art of accounting for a deal

Even seemingly straightforward M&A transactions and non-controlling investments can introduce complex issues under ASC 805, but strategically approaching ASC 805 can help improve deal evaluation, structuring and communication. Some examples include accounting and financial reporting for common control (or "put-together") transactions, assessing the necessity for push-down accounting and distinguishing between equity and cost method investments.

What impacts of ASC 805 should companies consider?

Detailed analysis can be necessary to determine the scope of the accounting guidance as well the entity that is subject to its requirements. For example, divestiture alternatives present several accounting and financial reporting issues for sellers to evaluate, such as whether the business can be disposed of to qualify as a discontinued operation before the sale.

Complex capital structures as well as puts, calls and other contingent provisions can require classification of ownership interests outside of equity. They may also introduce valuation complexities that can delay or even derail a transaction if not identified early in the process.

Complex valuation techniques are often required for acquired contracts, intangibles, contingent consideration (i.e., earn-outs) and other assets and liabilities that are difficult to value.

How PwC can help

PwC is a trusted resource for helping companies navigate the accounting and financial reporting challenges of business combinations. Our knowledge can help you develop strategies to withstand regulatory scrutiny, anticipate potential areas of focus in filings and meet constantly evolving expectations for clear and transparent financial reporting.

With PwC, your company can:

  • Develop a clear roadmap of the economic objectives that will drive the transaction and can be used to communicate goals, both internally and with advisors.
  • Determine the appropriate commercial, legal, tax, financial reporting, valuation and regulatory skills needed to complete the transaction and involve the appropriate professionals early in the process.
  • Consider the post-acquisition financial reporting implications of the transaction, including how the transaction will be communicated to stakeholders and whether the transaction will impact any debt covenants or other existing agreements.



{{contentList.dataService.numberHits}} {{contentList.dataService.numberHits == 1 ? 'result' : 'results'}}

Contact us

John Vanosdall

Accounting Advisory Solution Leader, PwC US

Follow us

Required fields are marked with an asterisk(*)

By submitting your email address, you acknowledge that you have read the Privacy Statement and that you consent to our processing data in accordance with the Privacy Statement (including international transfers). If you change your mind at any time about wishing to receive the information from us, you can send us an email message using the Contact Us page.