Accounting and Financial Considerations for Merger and Acquisition (M&A) Success

There are many accounting considerations to be understood and interpreted when companies decide to combine and it is a necessary step for companies to start assessing earlier in the combination process rather than later so as to proactively deal with any accounting issues as the end result is to produce an accurate set of financial statements in a harmonized accounting environment.

Over the last few years, there has been a higher than normal amount of company combinations. Companies pursue Merger and Acquisition (M&A) initiatives for several reasons. Two companies may undertake a merger to increase the wealth of their shareholders. Generally, the consolidation of two businesses results in synergies that increase the value of a newly created business entity. Or another reason could be- diversification, a company may use a merger to diversify its business operations by entering new markets or offering new products or services.

Mergers and acquisitions typically involve a significant amount of due diligence by the buyer. Before committing to the transaction, the buyer will want to ensure that it knows what it is buying, what obligations it is assuming, the nature and extent of the seller’s contingent liabilities, problematic contracts, litigation risks, intellectual property issues, and much more. This is particularly true in private company acquisitions, in which the seller has not been subject to the scrutiny of the public markets.

This eBook provides an overview of Key accounting considerations for your decision over Merger and Acquisition (M&A) initiatives this includes;